September 2011, the month the auto industry changed forever?

Since January 1 of this year, new Corporate Average Fuel Economy (CAFE) regulations are forcing automakers to do everything they can to ensure the overall fuel economy rating of their products drops to 35.5 mpg, or 6.62 L / 100 km, by model year 2016. This has obviously paved the way for the introduction of electric vehicles and the integration of fuel-saving technologies for cars, SUVs and trucks.

Following a proposal set forth by President Barack Obama, the Environmental Protection Agency (EPA), the National Highway Traffic Safety Administration (NHTSA) and the California Air Resources Board (CARB) are currently studying a pioneering plan aimed at substantially reducing that standard.

The goal? Drop fuel consumption numbers between 47 and 62 mpg (5 and 3.79 L / 100 km) by 2025. While the first scenario seems entirely plausible given the rapid evolution of today’s technologies, the second is the cause of heated debate, as it could very well change the face of the auto industry forever.

According to Sean McAlliden, an analyst at the Center for Automotive Research, a 62-mpg limit would require plug-in hybrids to occupy a huge 64% chunk of the market. He also believes the average purchase price of a vehicle would increase by $US 9,970, which would discourage buyers and force them to extend the service life of the models they already own.

That’s probably why the Alliance of Automobile Manufacturers is predicting a 25% drop in sales and the loss of 220,000 jobs. In other words, a disaster.

On the other hand, the EPA and NHTSA had previously stated that consumers would save between $5,700 and $7,400 in fuel costs over the lifetime of their vehicle, offsetting the higher monthly payments resulting from the added technologies.

All these factors seem to point to the adoption of a standard between 47 and 62 mpg, a middle ground. However, that may be easier said than done, given the number of buyers involved and the fact that such a decision will seal the fate of the industry.

Sandy Stojkovski, president of AVL Strategic Analytic Services, summed up the entire debate in one sentence: “Philosophically, you can ask yourself whether you should set regulations based on the possibility that they [the automakers] can do better than that”.

In September, the American legislators will present their bill, which will be followed by public consultations until June 2012. We’ll then have an excellent idea of the social and environmental challenges facing automobile manufacturers and get a glimpse at the future of the transportation industry.


_{Source : Automotive News}