NADA, consumer group fuel CAFE debate citing customer impact

IL-BLOG_70809-1 (082217 IL NADA, consumer group fuel CAFE debate citing customer impact)_WP_1440x962

Someone is wrong.

And we may not know who until 2025.

The National Automobile Dealers Association (NADA) thinks that failing to adjust corporate average fuel economy (CAFE) standards will mean fewer Americans will be able to afford new cars.

The Consumer Federation of America (CFA) says leaving targets in place will help Americans more.

And both organizations contend they speak for consumers as the federal government re-examines a mandated 54.5 mpg CAFE target for 2025 for all automakers.

Of course, they aren’t the only ones debating fuel-economy standards, just two of the most recent.

What consumers want

“We know something about what consumers want,” Peter Welch, NADA president, said recently during at Center for Automotive Research Management Briefing Seminars session in Traverse City, MI. “Affordability is everything; it’s the whole game from the consumers’ perspective.”

Meanwhile, the CFA cited a survey it said shows that 79 percent of Americans support current targets the group says will put $626 back into consumer pocketbooks each year.

“One reason for the widespread support of higher standards is that a large majority of those intending to purchase a motor vehicle in the future think that the vehicle’s fuel economy is important,” said the CFA in a press release announcing results of a July survey of 1,008 American adults.

But that doesn’t make NADA less skeptical about the impact of CAFE standards on new-vehicle costs.

Who’s right, who’s wrong?

“Every day at dealerships, people wonder if they can afford the monthly payments of a car they are considering buying,” said Welch, citing a $34,000 average transaction price of a new vehicle – up 57 percent from 20 years ago. “We need to make it possible for people to afford cars.”

The EPA says the 2025 regulations would cost $875 per vehicle, and that increased costs would be offset by fuel savings of $1,650 over the life of a vehicle, reports WardsAuto, referring to one of the federal agencies that is gathering input for a review of existing CAFE standards.

“But NADA and others predict the figure would run into the thousands of dollars,” WardsAuto reported.

“Customers are smart, do the math and know how to stretch a penny,” said Welch. “Getting it back in four or five years is not how customers think at dealerships.”

‘A guy trying to buy a car’

Meanwhile, a survey by the Alliance of Automobile Manufacturers (AAM) indicates that about two-thirds of consumers are willing to pay under $2,500 to meet government fuel-economy standards, “which would likely not cover the cost of updates.”

Based on the survey, “even if adults were given additional money when purchasing a vehicle, more would choose extra safety features over increased fuel efficiency,” the trade group said. The alliance, which represents a dozen large auto manufacturers, has called for a compromise that would “modernize” and ease CAFE targets, suggesting that it would be “the right thing to do.”

“You look at the world of one of [NADA’s] dealerships,” Mitch Bainwol, the alliance’s president and CEO, told WardsAuto, “and there’s just a guy there trying to buy a car.”

The EPA has said it will make a final decision on any changes in the standards by April 1, 2018.

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