CAFE standard challenge
 

http://money.cnn.com/news/newsfeeds/...1-18071056.htm

This is an interesting review of some the proposed CAFE change impacts.

Bob Wilson

Re: CAFE standard challenge
 

It's a pretty accurate and balanced report. One factor it leaves out though is that the vehicle makers may not have to voluntarily walk away from huge SUVs. The buying public may do that of it's own accord. Supplies of petroleum based fuels are expected to tighten significanlty as soon as 2010-2012, [ read fuel price spike ]. I can see $6per gallon fuel in that time frame.

There is already a headlong rush out of Body on Frame SUVs at present. If fuel doubles again without any increased efficieny then this segment will go the way of huge fintails. That immediately drops a huge number of 17-mpg vehicles from the weighted average for each vehicle maker. Presto every vehicle maker suddenly has a higher average fleet FE number.

But..if fuel does go to $6 or $8 or $10 per gallon I don't want to have to choose a vehicle from today's technology for my next vehicle. I want my choices to be:
60-100 mpg small vehciles
50-70 mpg midsized autos
35-45 mpg large autos
30-40 mpg crossovers
25-35 mpg trucks and SUVs

From a speech given by John Snow the head of Cerebus ( Chrysler ) he indicated that Chrysler was in favor of increased efficiency and noted that 70% of it's current fleet fell in the bottom segment noted above. That puts them at a huge risk for survival if like the others their current fleet FE is 17 mpg. Chevrolet is at 58% in this segment with an average FE of 17 mpg. Again if fuel jumps suddenly any maker this dependent on less fuel efficient vehicles will be hard pressed to stay afloat.

As rational business men I'm certain that the heads of GM / F / C and T can see the risks. It will happen, a retail fuel spike, probably sooner than we expect IMO.

Re: CAFE standard challenge
 

Using the stratification above which IMO is a stretch but within our technological range over the next 12 years a vehicle maker would just have to keep a balanced 'product portfolio'. If a vehicle maker sold 20% in each of those 5 segments - using the minimum criteria - its CAFE fleet average would be 40 mpg. That sounds like a smart business plan.

But, there is a key weakness in the program. The CAFE program is based on SALES. Thus if a vehicle maker does offer a full range of vehicles but the buying public chooses some other manufacturer's ultra efficient products the original vehicle maker might not be able to attain its 20% of sales in the 60-100 mpg category. A manufacturer could be penalized because of the buying public's whims. That's a tough one to legislate around.