CAFE regulations to cost Big 3 double that of Japanese automakers

[steinravnik]

CAFE regulations to cost Big 3 double that of Japanese automakers

While newly passed CAFE regulations will require all automakers to average 31.6 mpg fleet-wide by 2015, the new standards will have a greater impact on domestic automakers, a new report finds. The Big Three will have to pay about twice as much as their Japanese counterparts to comply with the new regulations.

In all, it is expected that the Detroit 3 will pay about $30.6 billion — including $15 billion by General Motors alone — to bring their fleets inline with the new regulations, according to Automotive News. But because Japanese automakers already produce more efficient vehicles, it will only cost them about $14.85 billion to meet the new standards.

The short lead time will also play into the expense associated with making more efficient vehicles. "That's not even really allowing for a full model change from where we are today," Rebecca Lindland, a Global Insight auto analyst, told Automotive News. "That means you've got to start getting these vehicles out right now and making drastic changes to your upcoming plans. It's going to be incredibly expensive."

http://www.leftlanenews.com/cafe-reg...utomakers.html

[Wagon of Fury]

I find the headline misleading. Isn't it more the case that "Big Three are late to the high MPG game and have to play expensive catch-up". Not as catchy though. I'm sure a niche manufacturer like Porsche isnt sweating it... much.

[mgescuro]

That was the biggest "No Duh" article of the year.

Larger fleets.... larger cars.... slew of not-so-efficient V8's, V6's... bigger fines.

[XCR440SP]

True on last years market, but with SUV and Truck sales dropping like rocks, it won't be as bad. In the Car market the big 2 aren't as bad (Chrysler might have issues). If Ford and GM are smart, they'll downsize the SUV segment for more cross-overs, beef up the 1/2 ton pickups so they're 8501 GVWR so they don't get EPA tested for mileage and therefore don't count, and continue the progress made on the other lines.

[Ming]

The problem with that, XCR440SP, is that as long as GM has the public image of "Truck and SUV company" -- not the place you go to shop for fuel efficient cars -- they can make all the crossovers they want and not sell nearly enough to make up for all of the SUV and Truck profits they're losing.

The Ford Freestyle struck me as a really practical vehicle, but the ho-hum sales (and now a name change to Taurus X) are due I think to the fact that people do not just wander in to Ford dealerships looking for a practical, fuel efficient car anymore. A few names stand out, like F-150 and Focus, but other than that --- Honda and Toyota, among others, appear more likely to capture the directionless shopper on the strength of their brand images when it comes to fuel economy and engineering focus.

In other words, someone is more likely to walk out of a Honda dealership with a different car than they intended to buy originally. Well, at least that's what I see with people I know who buy those brands. I could be wrong.

I'm just not sure that the Texas family that buys a new Suburban every 5 years is going to be swayed to buy a Traverse instead.

I've seen far too many driveways here in Texas with the Domestic SUV / Import Car combination for it to be a good sign for Domestics who are suddenly finding religion in smaller, more efficient vehicles and expect their customers to follow them.

Don't get me wrong, I still think they need to do it -- but they also need to make a Herculean effort to impress upon people that they really care about making best-in-class compacts and subcompacts to overcome all of the bad stereotypes that plague GM in particular. I just don't think a focus on making great crossovers is enough to change the perception that Toyota vehicles, in general, get better fuel economy (even in cases where it is not true) -- and that was the image even before the Prius came along, so I don't expect the Volt to produce too much of a halo effect if GM is still selling cars like the Aveo with its old Daewoo Lanos-era engine.

[AMERICA 123]

Originally Posted by Wagon of Fury

I find the headline misleading. Isn't it more the case that "Big Three are late to the high MPG game and have to play expensive catch-up". Not as catchy though. I'm sure a niche manufacturer like Porsche isnt sweating it... much.

Maybe, maybe not.

The whole damn program for the interim targets can be summed up as the latest most blatant, and brazen example of Toyotas destructive influence on all things automotive in America - including our regulatory process

The Europeans and the smaller Asian/Japanese makes are being totally screwed and GM, Ford, Chrysler, and Nissan are being given just enough to keep them at bay.

Its tough to call the purposed number that Honda got - other than to note its definitely not as good as what Toyota and Nissan are receiving.

I'll tell you one thing for sure.
If I was in a position to do so and my firm was one of the screwees here, I WOULD BE CONTACTING EVERY SINGLE OTHER OEM with a counter purposal to raise Toyotas TARGETS SUBSTANTIALLY and lower or maintain all of the rest.

In a cordinated manner I WOULD BE VERY PUBLIC ABOUT IT.

[ksr]

The government ought to realize that it's helping to destroy the domestic industry.

No one will agree with me, but I think they should slam the import makes harder on CAFE. Higher fines, perhaps higher standards. Hey, they aren't American companies, they pay virtually nothing for access to the best market in the world. Make them pay.

Would it be unfair to the import makes? No more unfair than the import regulations that have been slapped on American vehicles by other countries that end up boosting the costs of American vehicles to uncompetitive levels.

Personally I think the market itself should decide fuel economy standards. Automakers will build what they can sell. If low-mileage vehicles stop selling, they'll stop making them. But if you think there's some sort of moral obligation or "for the good of society" reasons for punishing manufacturers with CAFE, then morally it's even worse for foreign makers to dump their low-mileage vehicles into another country's market. Make them pay.

I'm just blowing off some steam. I hate CAFE.

[AMERICA 123]

Originally Posted by steinravnik

CAFE regulations to cost Big 3 double that of Japanese automakers

While newly passed CAFE regulations will require all automakers to average 31.6 mpg fleet-wide by 2015,

Two possible and if so significant errors here.

Unless I missed it, this is still in the purposed rule making stage - the commentary period ie not finalized yet - thankfully.

This is not correct in another way - I think - need to check.

The 31.6 targets the combined totals of the OEMS to meet that number, not each one individually. ( There are other individually tailored target numbers assigned for each OEMs fleet conponents. )

If I've got that wrong, ( the use of 31.6 ) there is a target number somewhere of great importance for the combined OEM number as described - its the core number to the proposal.

[HoosierRon]

Originally Posted by Ming

I've seen far too many driveways here in Texas with the Domestic SUV / Import Car combination for it to be a good sign for Domestics who are suddenly finding religion in smaller, more efficient vehicles and expect their customers to follow them.

One more time...

Cobalt XFE - best in class fuel economy. (Cobalt Q1 sales up 14.5%)
Malibu 4 cyl/6 speed - best in class fuel economy. (Q1 sales up 16.7%)
Impala - tied for best in class fuel economy. (March retail sales up 16%)
CTS - better fuel economy than 335i or C350. (Q1 sales up 55.1%)

Within 2 years: BAS+, Volt, Vue plug-in, new Delta platform

[Stéphane Dumas]

Originally Posted by Ming

The Ford Freestyle struck me as a really practical vehicle, but the ho-hum sales (and now a name change to Taurus X) are due I think to the fact that people do not just wander in to Ford dealerships looking for a practical, fuel efficient car anymore. A few names stand out, like F-150 and Focus, but other than that --- Honda and Toyota, among others, appear more likely to capture the directionless shopper on the strength of their brand images when it comes to fuel economy and engineering focus.

I guess it's time for some to wake-up and smell the coffee and they should discover then the Accord and Civics are now bigger and longer and the existence of gas-guzzling vehicules (Tundra, Sequoia, Lexus LX470) at Toyota.

I could call a case of "Manufacturing Dissent"

[psece]

What it will cost the domestics is in profit initially. The domestics profitable lines are SUV's and Trucks. Not so anymore. So GM, Ford will take what they normally invest in SUV/Trucks and move it to smaller, efficient cars.

Secondly, Small cars will become more competitive and the Japanese, Koreans, etc will have to invest to keep sales. Chevy Malibu is selling at a non-discounted price. Only a $1000 conquest rebate is available.

And third and most important, the sliding dollar will hit everyone importing products into this country. This is why Toyota raised prices. BMW just announced they were raising prices also. Yen Vs. Dollar, Euro Vs. Dollar

And the last point that I want to make is that both Ford and GM have smaller, more fuel efficient cars for sale in other markets. Both are now bringing those cars over for sale in the US. So Ford and GM aren't creating new vehicles that they don't have any experience in building. They do have IP so while they will still need to invest resources, it's not as bad as the article is making it out to be.

[BigThreeForever]

Originally Posted by ksr

The government ought to realize that it's helping to destroy the domestic industry.

No one will agree with me, but I think they should slam the import makes harder on CAFE. Higher fines, perhaps higher standards. Hey, they aren't American companies, they pay virtually nothing for access to the best market in the world. Make them pay.

Would it be unfair to the import makes? No more unfair than the import regulations that have been slapped on American vehicles by other countries that end up boosting the costs of American vehicles to uncompetitive levels.

Personally I think the market itself should decide fuel economy standards. Automakers will build what they can sell. If low-mileage vehicles stop selling, they'll stop making them. But if you think there's some sort of moral obligation or "for the good of society" reasons for punishing manufacturers with CAFE, then morally it's even worse for foreign makers to dump their low-mileage vehicles into another country's market. Make them pay.

I'm just blowing off some steam. I hate CAFE.

I hear you, buddy. Exactly right.

[Ming]

Originally Posted by HoosierRon

One more time...

Preach it to the choir, brother. The problem is, as the author of the article suggests (intentionally or not, see below), this is not in the minds of buyers yet.

Article:

But because Japanese automakers already produce more efficient vehicles

How many articles make that statement - or one much like it - every day? GM clearly needs to kickstart its image. The "Cobalt has best in class fuel economy! *with manual transmission " type ads have been run by GM for years now with different vehicles.

The increase in sales you note is to be expected in this climate, and especially in the case of the Chevies could well be due to Chevy loyalists who are just downsizing. The CTS's numbers are stunning. My wife balked at the fuel economy when she saw it at the mall, so I'd guess much of the CTS' success is just its awesome looks (what pulled her to the window in the first place) and reasonable pricing. Plus, some people must have just been waiting for Cadillac to make a vehicle again that truly makes a statement -- I think the new CTS does that.

Cars like the Cobalt and Impala in current form are not going to do a lot to change the fuel economy mindset. They need game changing redesigns and glowing reviews like the new Malibu got. I wanted a flex-fuel 3.5L Impala myself at one point, but every time I mentioned the Impala to friends they have an image of a big police yacht that is not fuel friendly. I had to explain that it was, but even then they raised skeptical eyebrows as if I was telling them "GM's SUV's get best in class fuel economy!" -- true or not, it doesn't fit the established image. I would hope that GM is open to all suggestions on how to change that, including having a "beat them at their own game" subcompact that wows the press (in addition to the "savior car" Volt). I'm not sure the Cobalt fits that description...and the "new" Astra is unfortunately here now only after going through what would be a complete product cycle where it debuted in 2004(?) - and saddled with a high Euro. Let's hope that the next Cobalt is such a vehicle --- the equivalent of the new Malibu.

Having best-in-class cars like the Civic and Corolla as default choices for the fuel and pocketbook conscious has long been a strength for Toyota and Honda. It makes people think that a Tundra will be more fuel efficient than a Domestic truck. GM's approach from the top down ("Suburban has best in class fuel economy!") comes off as marketing spin for people to ignore, and has not been as successful in translating to a fuel-efficient image that extends down to its smaller cars.

[AMERICA 123]

Originally Posted by ksr

The government ought to realize that it's helping to destroy the domestic industry.

No one will agree with me, but I think they should slam the import makes harder on CAFE. Higher fines, perhaps higher standards. Hey, they aren't American companies, they pay virtually nothing for access to the best market in the world. Make them pay.

Would it be unfair to the import makes? No more unfair than the import regulations that have been slapped on American vehicles by other countries that end up boosting the costs of American vehicles to uncompetitive levels.

Personally I think the market itself should decide fuel economy standards. Automakers will build what they can sell. If low-mileage vehicles stop selling, they'll stop making them. But if you think there's some sort of moral obligation or "for the good of society" reasons for punishing manufacturers with CAFE, then morally it's even worse for foreign makers to dump their low-mileage vehicles into another country's market. Make them pay.

YEP.

Hey, you know, this friends with benefits program is supposed to work both ways.

Time we got off the kitchen table and turned around.

( Sitting down is out the question )

Since CAFE is now poised to eliminate the Europeans and give Toyota unfair advantage I no longer support it unless reformed.

[Lunden]

Why will be be more expensive for the Domestics.

They both have European operations and Ford has Mazda to boot....

While we are at it, wasn't it a GM exec who said "let them tax everything over 1L, we have more small cars then anyone else. We will soon be back to 50% of the Market"

I hate to say this but more and more I am agreeing with Buickman....(Shoot me someone)