New Fuel Rules Favor Detroit Automakers

The Wall Street Journal “Today's Gas-Guzzling Exotic Cars May Get Zapped by New Fuel Rules” focuses on the problems specialty cars will have meeting the proposed CAFÉ rules. The new fuel economy standards will be based on a vehicle’s footprint. Specialty, high powered luxury and sports cars cannot meet the compact and midsize footprint mileage requirements. They will have to either redefine luxury and sport, or pay fines.

Separate standards will be set for cars and light trucks for each footprint size. For example, a 45 square foot small car footprint would be required to average between 35 and 40 MPG. However, the same size small truck would have to average less than 35 MPG. As the footprint increases, the mileage requirement drops. This way the average new American fleet will achieve 35 MPG, without eliminating large vehicles.

The Journal gives a few examples of the overall 2015 mileage requirement by company: Porsche 41.3, BMW 37.7, Toyota (TM) 34.6, and General Motors (GM) 34.7.

The new standards heavily favor Detroit and foreign full line manufacturers by allowing large cars and SUVs to continue, but everyone will still have to adjust their definitions of performance and luxury. Performance has been a horsepower race with little regard to a vehicle’s weight. Luxury has been a gadget race, again with little regard for adding weight to a vehicle.

In the new world, mileage is fixed by vehicle size and by definition so is horsepower. So the only way to increase performance is to reduce weight. Thus horsepower per pound (HP/lb) will become the key performance metric. Since lighter materials cost more, higher priced cars will sport better performance. On the luxury end, each power feature added will require weight be removed from somewhere else. Lower priced cars might actually have to remove features to achieve a reasonable weight.

The new emphasis on HP/lb will spur an avalanche of new technology in material science and engine efficiency. This will be a great transition into the weights needed for all electric vehicles. While not ecologically perfect, I believe the new standards provide the right motivations for the auto industry.

No Disclosures.

Comments

[Speedzzter:]

Not surprising. One-size-fits-all bureaucratic tampering with the free market often adversely affects fringe and niche segments more adversely.

Don't be surprised if we see "footprint" circumvention through larger "Bonneville" streamliner-styled sports cars (i.e. a larger, "lower-density" aerodynamic vehicle designed to artificially increase the "footprint" through wider tracks, tapered and extended tail sections and larger front "splitters"). Also don't be surprised if we see more "trucklets" (Utes, "Rancheros," "El Caminos") and CUV-based "sports cars," with just enough "truck" features to qualify under the more generous truck CAFE standards.

One thing is sure, the new rules will bloat the price of high performance models and will tend to reduce nimbleness.

2008 May 14 09:55 AM

[Nextel Acce...:]

good point

2008 May 14 10:50 PM

[marketwatcher2:]

Any move to boost the Detroit 3 will be good for them and America......This free market thing isn't all free.......seems some Foreign Companies take advantage of Our Free Economy while protecting theirs......It will be good to see American Auto Companies in the lead at home again.......We need to tighten up just a little to make things level for American Companies in all areas.

2008 May 16 09:57 AM

[doginyourco...:]

Fuel efficiency will be demanded by the consumer since gas prices are on a long term upward trend.

2008 May 16 05:31 PM

[Frank_NJ:]

I Agree 100% with you Marketwatcher. The rest of the automotive producing countries partner with their automotive industries, except the US. So much for the free-trade myth..

2008 May 20 10:33 AM