New study says 62 mpg fuel-economy rules will lead to massive job losse

New study says 62 mpg fuel-economy rules will lead to massive job losse

A new report from the Ann Arbor, Michigan based Center for Automotive Research(CAR) says the Obama administrations proposed 62 mpg fuel-economy target for 2025 could lead to hundreds of thousands of job losses, boost the price of a family sedan to $55,000 and deliver only minor savings to consumers.

Ironically, the CAR think tank has supplied much of the data that supports government claims that the bailouts of General Motors and Chrysler saved 1.2 million jobs, billions in tax revenues and billions more in welfare and unemployment checks that never had to be paid out.

These mandates are so tough, why would (the White House) be interested in destroying an industry they just saved? asked Sean McAlinden, CAR chief economist and vice president of research.

Automakers must meet a U.S. fleet average fuel economy of 35.5 mpg by 2016.

Last year, the Obama administration proposed new CAFE rules beginning in 2017 that would require average increases of 3% to 6% per year, achieving 47 mpg by 2025 at the low end and 62 mpg at the high end.

If gasoline prices are $6.00 per gallon in 2025, a case can be made for continued 3% annual improvements in fuel economy beginning in 2017, says Jay Baron, president and director of manufacturing systems at CAR and a co-author of the study. But more dramatic increases would prove catastrophic to the U.S. auto industry, he said.

To meet the 2025 CAFE standards, automakers will have to completely and utterly redesign the body and chassis of all their products as well as the manufacturing plants and supply chain, Baron said.