Former NADA Chairman McConnell testifies on CAFE before Congress

Former NADA Chairman Forest McConnell told two Congressional House subcommittees that the most important point for dealers about fuel economy standards is consumer choice.

Testifying before the House Digital Commerce and Consumer Protection Subcommittee and House Environment Subcommittee, McConnell recounted that in his 40 years of selling cars, this is what happens: “People choose their new vehicles based on two factors: (1) does it fit their needs? and (2) can they afford it?”  The problem with the current Corporate Average Fuel Economy standards, says McConnell, is that they will substantially raise of new vehicles and put them out of reach of many buyers.

Here’s why:

The One National Program developed in 2009 under the Obama administration to regulate CAFE standards has evolved into three different, sometimes conflicting programs. That’s the opposite of the original intent to have a single national standard. The promise of a single standard was the reason the auto industry was persuaded to support the plan in 2009 – because automakers and other industry players wanted to avoid a patchwork of state laws.

Now, McConnell said, fuel economy is regulated by the National Highway Traffic Safety Administration (NHTSA), the Environmental Protection Agency (EPA) and the California Air Resources Board (CARB). And CARB’s CAFE rules apply not only to California, but also to the 12 other states that follow them, including Maryland.

“All this duplicative regulation costs money,” said McConnell, and “automakers are forced to charge more for the vehicles consumers want to subsidize the building of vehicles regulators want.”

The bottom line: The One National program “will raise the average price of a vehicle by nearly $3,000, and will price over six million people entirely out of the new-car market.”

Also testifying at the hearing were the Alliance of Automobile Manufacturers, Global Automakers and the Union of Concerned Scientists (UCS). After the formal statements, members of Congress engaged panelists in a discussion of the market for electric vehicles.

John Bozzella, CEO of Global Automakers, said for automakers to meet the standards – which are currently under midterm review – the marketplace will need to move increasingly toward EVs and hybrids. Dave Cooke of UCS said that the automakers had reacted in similar fashion in the early days of safety technology, saying they would not be able to meet the mandates, but then met them.

And so, the fuel economy debate goes on. Stay tuned!

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