A Peak Into the Future of Buying a Car

The Obama administration has announced it will impose new mileage and tailpipe emission standards for any companies selling cars in the US.  What will the new standards, that will require a fleet average of 39.5 mpg, mean?  I’m not a futurist, but common sense and an understanding of basic economics suggest some likely outcomes:

  • Car prices are going up.  The White House claims the new rules will add $1300 to the price of producing a car. It’s probably best to assume that’s a lowball figure.
  • We will be driving smaller cars.  This is the only practical way to increase gas mileage substantially in the near future.
  • More fatal car accidents.  Larger, heavier cars are safer. The main way automakers will meet the new guidelines is by making their cars smaller and lighter. There is no doubt some accident victims will die in small cars that would have survived in larger ones. Since it’s a tradeoff, I’d like an honest estimate of how many Americans will sacrifice their lives to this policy. If the White House has not calculated this number, it hasn’t done its job.
  • The price of the relatively few big cars produced will be through the roof.  SUVs will again be highly profitable for auto companies, but on a much smaller scale, since their production will be limited. It’s likely you’ll be paying a significant premium over sticker price. When demand exceeds supply (and future supply is restricted by law), prices go up.
  • Used SUVs will jump in price.  Again, it’s supply and demand. Many will choose used SUVs over new clown cars.
  • A massive rush to buy larger vehicles before the regulations kick in.  When people fear something they want will soon be more difficult to find, they buy it.
  • A brisk market for replacement parts for large vehicles.  People will hold onto their beloved gas-guzzlers as long as possible, rather than dumping them for new golf carts. Witness the 1940s and 1950s American cars on the roads of Cuba. This could generate opportunities for someone to organize networks for buying/selling/trading auto parts more efficiently. And the after-market parts business is likely to boom.

Does this list sound depressing?  Excessive government regulation rarely works to the benefit of consumers.  Let me know what I’ve missed, and I’ll add your predictions to the list.

2 Responses to “A Peak Into the Future of Buying a Car”

  1. Melisa S Says:

    I believe the NHTSA does calculate the number of additional fatalities that result from a smaller more fuel efficient fleet.

    Keith Hennessey wrote about it here: http://keithhennessey.com/2009/05/19/understanding-the-presidents-cafe-announcement/
    He has the NHTSA document here: http://keithhennessey.com/wp-content/uploads/2009/05/NHTSA_analysis.pdf

  2. admin Says:

    Hi Melisa. Thanks for the links. Hennessey doesn’t mention any specifics about fatality estimates–just that the new White House philosophy doesn’t seem to value safety. He is obviously disturbed that the administration appears to be pushing the NHTSA into the background, while giving the EPA more clout. The inevitable result would be valuing fuel efficiency over safety. I’m sure the NHTSA crunches these numbers. Unfortunately, not too many people are discussing them.

    I tried to find the NHTSA’s analysis of the new proposal on their web site, but gave up in frustration. I highly recommend Hennessey’s blog for an insider’s view of policy analysis. But we shouldn’t have to rely on him to seek out and post 900+ page documents on such an important subject. We need to know how many of us will be sacrificing our lives for fuel efficiency. Then an educated populace can decide whether it’s worth it.

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