Bad idea: Porsche wants a pass on fuel economy rules
You might make a case that a car company that only sells a few hundred or even a few thousand vehicles in a 16-million-vehicle-a-year market doesn't really make much of a dent in emissions or fuel consumption. This is particularly true if the cars they sell are high-performance models that typically only get driven a few thousand miles a year at most. This is the case for companies like Ferrari and Lamborghini that only sell about 5,000 cars a year worldwide with perhaps half of those in the United States. By comparison, Porsche sold over 34,000 vehicles in the US in 2006 and about 100,000 worldwide.
Is a company that builds 100,000 vehicles a year low volume? Porsche would have you think so. Currently car companies that build fewer than 10,000 vehicles per year are classed as low-volume and are exempted from paying fines for exceeding the corporate average fuel economy standards. Ferrari, Lotus and Lamborghini fall into this class. However a little-mentioned provision of the energy bill passed by the Senate last spring would change that hard 10,000 unit threshold to a variable 0.4 percent of US market share. At current market volumes that amounts to about 64,000 cars a year and it could be more if the market ever starts growing again. This would allow Porsche to save the $4.6 million in CAFE fines they paid last year. As with so many other things about CAFE, this is a bad idea. Leave the low-volume threshold where it is or even lower it. Sales of 64,000 vehicles a year may be small compared to GM or Toyota but those are the kind of volumes that will make a difference. Those that can afford sports cars and SUVs priced from $50,000-150,000 can afford to pony up a little more if the vehicles don't meet the fuel economy threshold. Although Porsche may build higher performance vehicles than most companies, at their current volumes they should not be treated any differently from any other mainstream car-maker.
[Source: Automotive News - Sub. req'd]
Reader Comments (Page 1 of 1)
Joseph 8:44PM (11/26/2007)
What's the big deal? Porsche is a great "low-volume" manufacturer of sports cars. (Well, and SUVs. How did Porsche ever get into that?)
Fuel economy standards shouldn't in any way interfere with the true low-volume manufacturers. Fuel economy standards should interfere with companies like Porsche however. They shoudln't force Prosche to raise their fuel-economy, but instead give them the choice to raise fuel-efficiency and not pay fines, or keep fuel-efficiency stagnant and pay fines.
Porsche, like other carmakers, has simply been paying fines, at the expense of the MSRP of their vehicles. What's the big deal? the people who buy these cars can easily afford the small extra cost associated with each vehicle.
If European or U.S. fuel economy standards are actually FORCING Porsche to increase its mpg, then there's a problem. But if the the problem is that Prosche will have to pay more fines, they there is no problem at all!!!
Reply
rgseidl 8:07PM (11/26/2007)
The best option would be to ditch both CAFE and the gas guzzler tax altogether and just raise fuel taxes slowly, predictably but irreversibly. Say, an addition 2 cents every month until further notice (but at least 8 years). The extra revenue collected should be offset by cutting general sales tax or, a flat income tax credit.
Reply
Karl-Uwe Strunzen 9:20PM (11/26/2007)
All that needs to be done here is to follow the example set in Spain: as of 1 January 2008 low emission cars such as the Fiat 500 will be tax exempt, while high-pollution cars (CO2 over 200) such as the big SUVs will pay 14.75% (which is quite a bit of money for the Porsche). Other countries still have taxes based on horsepower but are soon to follow Spain's example.
This could be improved by simply turning up the volume significantly - after all 14.75% isn't even the standard luxury goods tax in most countries....In Europe cars are relatively efficient and nowadays if the CO2 is above 200 we're basically talking about German very expensive, high-pollution vehicles
If people want an "exclusive" car even if it emits 358 g CO2/km (compared with 111 for an inexpensive Fiat 500) and causes a whole host of other problems (i.e. all the other contaminants, pedestrian deaths, traffic problems, etc) then why not make them even more "exclusive" by bringing this rate up to 30% and spicing up the yearly registration as well...
Bring it on!
Reply
Karl-Uwe Strunzen 10:39PM (11/26/2007)
100,000 cars is most certainly not low-volume. Hopefully taxes and other measures will eventually take production down to Ferrari-type figures.
If you go to the ACEA website you can see that Porsche misses out to making it on their TOP MANUFACTURERS LIST by volume because of Chrysler, with 74000 vehicles up to October ! Chrysler most certainly is not low-volume..even in Europe... and only someone like Porsche would have the nerve to come out and say they are low-volume.
Reply
Karl-Uwe Strunzen 11:06PM (11/26/2007)
...any guesses as to who forked out for the Senate energy bill then ?.....
Reply
Furion 7:25AM (11/27/2007)
I think we should look at the total emissions of the car, not only emissions / km (or mile). Base taxes on how much you pollute, which is miles driven * emissions/mile.
There's a simple solution here, since the emissions caused by a car are roughly equivalent to gasoline consumption. So jack up the gasoline tax.
No point in taxing the purchase of a car, because it might get driven 5k or 50k a year. If you tax the gasoline, it would steer people to limits their total emissions, while not punishing those that want a high-performance car for the weekends, which isn't going to pollute much anyway.
As for CAFE, I don't think there should be 'low-volume' exceptions for anyone.
Reply
Throwback 8:19AM (11/27/2007)
I will never support tax increases as a way to change behavior. Giving the government more tax money so then can waste it makes no sense to me. Yeah I know, the additional taxes will only go to blah.. What I would do is offer tax credits to people who buy fuel efficient cars, regardless of the technology used. Start with a credit at a combined 26 MPG and increase the credits from their with the high end topping out at 40 MPG combined average. Rich folks will always be able to buy expensive low mileage vehicles. Just like rich folks can afford to jet around the world and heat and cool their 8,000 square foot homes. If you are Al Gore, you buy carbon credits which means you can pollute as much as you want, as long as you pay for the privilege.
Reply
Derek 12:05PM (11/27/2007)
100,000 vehicles worldwide isn't low volume??? Chevy alone sells roughly 2x that each MONTH in just the US. Considering that vehicles like Porsches typically get driven a fraction as much as their more pedestrian counterparts and the pollution generated by new Porsches really starts to look more like a statistical anomaly.
Reply
jy 3:00PM (11/27/2007)
@Derek
I'm sorry, but I see porsches driven as commuters every day. I wouldn't consider it low volume at all. The ones who deserve to get exemptions are the rare exotic cars, like lambo, lotus, and ferrari, cars that are usually driven during the weekends if they are driven at all. You are lucky to see one in a month. A Porsche, I see every day. Porsche is too mainstream to be consider low volume. In fact, these low volume cars are lucky to get exemptions, if it weren't for lobbyists, they would have to pay regardless. The fines are multiplied by amount of offending cars, so Porsche ends up paying less anyways. For 2006, each Porsche ended up paying ~$140, pocket change for Porsche patrons.
Reply
Karl-Uwe Strunzen 8:17PM (11/27/2007)
I think it's pretty obvious that you need to have higher taxes for those cars which are the least fuel-efficient, while appropriately taxing petrol as well. This is having a positive effect on manufacturers who are now trying to be more respectful of the environment, with the manufacturers of the environmentally worst cars at times forced to reconsider their position. For example, with BMW and the London Congestion Charge:
http://business.timesonline.co.uk/tol/business/industry_sectors/engineering/article569671.ece
Petrol in Europe is already heavily taxed and indeed it's mainly tax you pay nowadays at the petrol pump.
Besides taxes based on CO2 the EU are now harmonizing the rules on how to inform consumers about the CO2 performances with things like minimum advertising space and such (just like with the tobacco industry).
Reply
Karl-Uwe Strunzen 11:47PM (11/27/2007)
It's not just the order of magnitude difference or the ACEA tables which make it pretty obvious that at 100,000 we are talking high-volume. This is also reflected in the car production where Ferrari make their cars one by one, with an artisan approach (e.g. only 20 specimens are being produced of the latest FXX model), while Porsche have exactly the same production system as all the high-volume manufacturers. You can also just use your common sense (as JY has done) and just think of all the Porsche SUVs you see running about with people doing their shopping or going out for their "lattes".....
In any case there shouldn't be any low-volume threshold and all cars which are heavy polluters should be penalised. The pinch in any case will be proportional to the number of cars produced so this is already taken care of.
Reply