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Government Mandate on Fuel Economy May Increase Auto Prices

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On: Tue, Jun 29, 2010 at 10:44AM | By: Sherry Christiansen


Government Mandate on Fuel Economy May Increase Auto Prices

Experts have reported that although there will be savings at the gas pump, the cost of automobiles will rise significantly. It is estimated that consumers will pay approximately $434 more for each vehicle they purchase in the year 2012, and by model year 2016 that number will go up to $926.

According to the Transportation Department and the EPA, consumers would actually save over $3000 on fuel expense in the lifetime of their vehicles.

The new mandate will cost the auto industry somewhere around $52 billion, but the government reports that the program will provide $240 billion in savings to consumers, who will realize the savings through lower fuel consumption.

Obviously, the government hopes to decrease our fossil fuel usage and lower green house emissions by setting national standards for increased fuel-efficient cars of 35.5 miles per gallon, to be implemented within the next six years. Of course that standard will be higher for commercial vehicles. The increase is close to 10 MPG over current standards set by the National Highway Traffic Safety Administration. The actual number could be more like 34.1 when credits for lowering greenhouse emissions (for example, preventing coolant leaks from air conditioning) are taken into account.

According to an article by Ken Thomas of the Associated Press, Transportation Secretary Ray LaHood stated, "Putting more fuel-efficient cars on the road isn't just the right thing to do for our environment, it's also a great way for Americans to save a lot of money at the pump."

Dave McCurdy, head of the Alliance of Automobile Manufacturers, a trade group representing 11 automakers, said the industry supported the single national standard for future vehicles. He said the program made "sense for consumers, for government policymakers, and for automakers."

According to MSN News.com, not all dealers were pleased. Ed Tonkin, a Portland, Ore., car dealer who chairs the National Automobile Dealers Association, said the rules were the "most expensive fuel economy mandates in history" and would turn many new cars and trucks into luxury items for consumers. "Under these new mandates, the price of new cars and light trucks will rise significantly, meaning fewer Americans will be able to buy the new vehicles of their choice.

Many environmental groups disagree with auto dealers stating that the changes will offer more choices to consumers since all cars would have better fuel economy, not just the more expensive Hybrid models.




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