Auto Dealers: Obama’s ‘Flawed’ Fuel Economy Plan Will Hurt Consumers, Car Quality

By Penny Starr | September 21, 2011 | 5:12 PM EDT

National Automobile Dealers Association

( – The nation’s auto dealers gathered in Washington, D.C., this week, in part to lobby for less government regulations on the industry, including fuel economy mandates they say will cost consumers.

In a handout – “A Flawed Fuel Economy Structure Produces a Flawed Result” – distributed at the conference, details of those costs – based on the government’s own estimates – were summarized.

The cost of an average vehicle, for example, will increase by more than $3,000 in 2025 because of fuel economy and global warming vehicle mandates enacted by the Obama administration, according to the Environmental Protection Agency and the National Highway Traffic Safety Administration.

Bailey Wood, director of legislative affairs and communications with the National Automobile Dealers Association (NADA), discussed the handout with and called $3,000 a “softball estimate.” Wood said the Center for Automotive Research puts the cost increase to comply with fuel economy standards at as much as $10,000 per vehicle.

Bailey said the Obama administration wants to double the fuel efficiency of vehicles to about 55 miles per gallon by 2025.

“Doubling fuel economy has a very real cost,” Wood said.

As a result, according to the Energy Information Administration, vehicles that currently cost $15,000 will be regulated out of existence and be replaced by more expensive cars that meet fuel economy and emissions requirements.

The Obama administration also wants 25 to 66 percent of vehicles on the market by 2025 to be hybrid or electric – a reality Wood said seems nearly impossible. To date, these kinds of vehicles – even during the highest prices at the pumps – have never topped three percent of sales, Wood said.

Then there is the overall cost to the automobile industry based on the money it will have to invest to comply with mandates and regulations. According to the EPA, the cost for Market Year (roughly August through July) 2011 is $1.46 billion. Between 2012 and 2016, that cost will total $51.7 billion.

NADA did its own math to estimate the cost for compliance from 2017 to 2025– $150 billion.

“That will make it the most expensive auto rule in history,” Wood said.

In order to meet the Obama administration’s fuel economy standards, vehicles will also become lighter and smaller and have smaller engines and less horsepower, Wood said.

In other words, Wood said, the mandates also will limit customer choice. Right now, trucks, SUVs and minivans are the best-selling vehicles in the country, but that could change.

“Even if I want to buy one of those, I may not be able to buy one,” Wood said.

Wood said the auto industry is in favor of fuel economy standards because customers want fuel-efficient vehicles, but customers also want choices.

Fuel standards “need to be set in conjunction with consumer demand,” Wood said.

The handout also includes data from the DeFour Group, which estimates that auto industry job loss when the 55 to 66 mpg fuel standards are met in 2025 could reach 220,000.