Chrysler chimes in on CAFE proposals
In the last couple of weeks, Toyota has gotten most of the attention when it comes to fuel economy proposals in Congress, but other car-makers are having their say, too. Like pretty much every other major manufacturer, Chrysler is coming out in support of the House of Representatives' Hill-Terry bill. Chrysler's main beef with the Senate proposal to raise the standard to 35 mpg is the fact that the current distinction between standards for cars and trucks would be eliminated under the senate bill. Given that there are actually a lot of legitimate needs for trucks, Chrysler feels this change would be impractical. The Hill-Terry bill keeps separate standards and also pushes out the time-line. The Hill-Terry bill also has flexibility in what the thresholds would be. This latter difference is what concerns supporters of higher CAFE standards because they feel it will ultimately get watered if it is passed. If Congress would do something to insure a minimum price for oil so that demand for more efficient vehicles would be maintained and enhanced, then all of these arguments over how high to raise the standard would be moot.
[Source: Chrysler]
Reader Comments (Page 1 of 1)
mrbell321 1:25PM (10/17/2007)
Is it just me or are the OEM's missing the point of CAFE standards? "There is a legitimate need for trucks, so they shouldn't have to get 35mpg". That's why it's Corporate AVERAGE Fuel Economy. One in 30 people may need a large truck. That truck can get 5mpg, if they really need it to. The other 29 people get vehicles that do 36mpg and the CAFE is preserved. Of course, I suppose it's not really their fault that most people feel the need to drive stupid vehicles. They really are just supplying the demand. Higher gas taxes should reduce that...
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BlackbirdHighway 1:57PM (10/17/2007)
For companies like Chrysler, 70% of sales comes from trucks, and only 30% from cars. This is not because 70% of the people need trucks, it's because the profit on trucks is higher, so the companies push trucks. Then they complain that higher CAFE standards may cause them to change the mix of vehicles. What they are really saying is that it may cost them profits. Most likely, people are going to shift to smaller vehicles anyway. Today the price of oil hit $89 a barrel. It may be that in 5 years vehicle fleets will be well above the CAFE standards, just because of the high cost of fuel.
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steven 2:07PM (10/17/2007)
@1: For quite a few years now trucks had been creeping up and passing the number of cars sold in the US. On the order of millions and millions for trucks. And a lot of those trucks are getting less that 20 MPG.
Consider that in CY2006, Chrysler group sold 1.46 MILLION trucks and only 676,000 cars. The averages are going to come out a bit different now aren't they.
BTW, any truck maker that is getting 5mpg would need to be shot. Even a fully loaded 18 wheeler doesn't get that bad of mileage.... http://www.caranddriver.com/shortroadtests/14167/truck-stuff-2007-international-prostar-limited.html
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rgseidl 5:16PM (10/17/2007)
@Blackbirdhighway -
profits? What profits? Detroit is pushing trucks because it failed to invest in cars, which carry lower margins. That was fine in the 90s but the war in Iraq plus robust growth in all major economies (incl. China and India) has caused the price of oil to skyrocket. Now, legacy pensions and health care liabilities mean there is very little cash to spend on R&D. GM is learning to better leverage the expertise of its global subsidiaries but Ford isn't (yet) and Chrysler doesn't have any.
Arguing that trucks should be in a separate category is bogus in that commercial users could pass any cost increase on to their customers. Those who choose to drive trucks and SUVs for personal use could switch to wagons or minivans, but Detroit doesn't want to invest in sexing those up because the margins are lower.
Much the same discussion, albeit at a different fuel economy level, is going on in Europe. The various German premium brands are fighting their corner in upcoming CO2 fleet average emissions regulation that will interfere with their profitable business models.
That said, the common good - air quality, global climate, energy security - should not be sacrificed for the financial benefit of a few corporations, even if they are major employers. The European and Japanese examples have shown that high fuel taxes and preferred vehicle classes (kei cars) do generate demand for high vehicle fuel economy and a willingness to pay a lot even for small cars. CAFE-style regulation is now coming on top of these earlier measures.
As for placing your faith in the power of the price of oil alone: it will tumble by perhaps $20-$30 a barrel as soon as one major economy goes into recession. On past form, it is certain that this will happen sooner or later. No-one really knows how serious the subprime mortgage problem in the US will turn out to be. Neither does anyone know how long China can sustain its current breakneck growth rate, given the inevitable social and environmental strains this entails. Germany is experiencing sharp rises in the cost of living, which could lead to rising interest rates = slower growth in the Euro area.
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EnergyBill 2:31AM (10/18/2007)
It is not suprising that Chrysler would come out against the senate version of the new CAFE standards. The auto lobby is working hard at getting President Bush to veto this bill with provisions that would push fleet wide fuel efficiency standard of 35mpg.
I think this is a shame as this bill could be monumental in helping us reduce oil consumption, help reinvigorate the US auto industry and help combat green house gas emmisions.
I am working with a coalition that is pressuring congress to pass a strong and effective energy bill. Go to http://www.energybill2007.us to learn more and sign our petition.
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Muskie 12:26PM (10/19/2007)
I do some work with the Auto Alliance, and before you guys jump all over me, just hear me out about trucks and Hill-Terry.
"mrbell321," is very correct that CAFE accounts for the fleet. Yet, as "BlackbirdHighway," mentioned, a good deal of the American aumomakers fleet is light trucks and vans. I don't think it's 70%; I think it's around 55%, but I may be wrong.
Either way, it makes sense to have different standards for cars and trucks because they serve different purposes. Minis are smart for cities, but ranchers need payload and small business owners need vans.
That's why I think Hill-Terry is a good bill. It's a step forward on fuel economy, but it's a reasonable step. (Of course, CAFE doesn't really do much to curb CO2, but that's another story).
I tried to keep these comments brief as I am interested to hear your thoughts. Keep in mind the Auto Alliance would like to see automakers do well, and that means riding WITH the tide to better fuel economy.
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EnergyBill 9:12PM (10/22/2007)
I think that we all need to realize that we will benefit from increased fuel efficiency. Another important point is that CAFE standards are fleet wide standards. This does not mean that each car must achieve at least 35mpg, but rather the mileage of all the cars manufactured by a given auto company must average out to 35mpg.
This leaves plenty of room for a company to make large trucks that are strong and powerful, yet on the other side they must create cars that are efficient and balance out average.
The technology exists to do this, and you can help make sure that it happens by going to http://www.energybill2007.com
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