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Feds to Skyrocket Prices of New Cars?

Previously this blog discussed the true overall cost of owning a car, everything from initial purchase price to gas to maintenance, repairs and more.

One thing we forgot: ever-changing government regulations.

The Associated Press reported July 1 that a lobbying group of automakers are protesting a federal agency’s goal to increase fuel economy standards significantly by 2015.

Such stories often go unnoticed by the motoring public because people tend to think anything beyond 2009 is a long ways off.

New Car Taxation

A street sign that says the future next exit2015 Is only seven years out. And imagine adding an estimated $2,063 on top of the cost of all new cars by then.

The National Highway Traffic Safety Administration has set a goal of boosting fuel economy by 4.5% a year between 2011 and 2015.

Now, 4.5% might not seem like much. But remember, it increases each year, meaning a whopping 18% increase over four years.

The lobbying group, Alliance of Automobile Manufacturers, represents 10 major automakers.  The Alliance claims the government is underestimating the cost of this goal, and the target compliance dates are unreasonable.

The Alliance submitted a 77-page response to the NHTSA’s request for comments on the proposed new rules, according to the AP.

A graph showing the rising cost of oil

It’s All About the Oil

“It would require manufacturers to expend resources at a pace that is excessive given the fact that the auto industry is already under economic stress,” the Alliance stated.

Last year, Congress passed a law that requires new cars and trucks to meet a collective fuel economy average of 35 miles per gallon, by 2020. Automakers supported the law.

However, NHTSA may be a bit too aggressive in implementing the law. Why, after all, is an agency with “traffic safety” in its name dealing with gas mileage?  If we get low gas mileage, traffic will be less safe?

It would seem something like the Environmental Protection Agency should be leading the charge.

We all know the federal government doesn’t always make sense. So the NHTSA is in charge, and they want a fleet average of 31.6 miles per gallon in seven years.

The Administration believes the proposed new rules would add $821 to the cost of new vehicles in 2015.  That alone should make car buyers shudder, as they will be paying for the government’s desire to protect its valuable oil resources.

But the Alliance claims the NHTSA underestimates the costs of improving technology, such as research into hybrid batteries. The Alliance claims the new rules would actually add more than $2,000 to the cost of new cars and trucks.

All Star Group of Automakers Protesting

Fist in the air in protestThe bottom line is consumers would not ultimately save more money in fuel, with the better miles-per-gallon figures. Overall, car sales would take a significant hit – as if the new car sales industry, and our economy, can take another blow to the gut.

And that doesn’t take into account the other five years included in the law passed last year. What will be required from 2016 to 2020, to get to the magic 35 miles per gallon quota?

The Alliance is comprised of General Motors, Ford, Chrysler, Toyota, BMW, Mazda, Mercedes-Benz, Mitsubishi, Porsche and Volkswagen. Quite a group of international industry all stars.

Luckily more than 100 comments were submitted to the request for comments. Hopefully the feds negotiate, and keep in mind the public’s pocketbook.

If they don’t, the public’s opinion of fuel economy and protecting the environment could swing in the other direction, causing a huge backlash.

If the NHTSA today has little time to deal with such issues, imagine the time lost to dealing with inquiries from the public – and media.

The Administration may soon learn how uncomfortable it is to be included in headlines and news quotes, particularly when it comes to our cars.

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