The Obama administration has finalized the landmark 2017-25 fuel economy rules that will nearly double the efficiency of the nation’s cars and trucks over the next 13 years to a fleetwide average of 54.5 miles per gallon.
As reported by the Detroit News, the new rules will reshape what Americans drive — and may prod automakers to add fuel saving technologies at a faster rate. The rules also give automakers credits for building hybrid light trucks and adding fuel saving features that the government didn’t take into account in prior years.
The White House Office of Management and Budget said in a notice posted Tuesday (Aug. 28) morning that it had cleared the fuel economy rules on Monday.
The Obama administration initially planned to finalize the rule by July 31, but the final regulation has been held up by an extensive White House review.
Last summer, the Obama administration won the support of 13 major automakers, including Detroit’s Big Three, for the 2017-25 rules, which will cost the industry $157.3 billion, according to the preliminary proposal.
The price tag may change in the final rule released Tuesday.
Under the deal reached during months of secret talks led by former White House auto czar Ron Bloom, the Obama administration agreed to lower fuel economy increases for light trucks to 3.5% annually through 2021, while keeping the yearly hike for cars at 5%.
The National Highway Traffic Safety Administration (NHTSA) and the Environmental Protection Agency (EPA) also agreed to a midterm review to ensure that the final four years of the program are feasible. California also agreed not to impose its own state standards.
In total, drivers will save $1.7 trillion at the pump, including the 2012-16 mileage increases that were finalized in 2010. That’s far more than the costs of more expensive autos. Society will see net benefits of $252 billion to $358 billion.
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The first half of 2012 set the record for the highest-ever fuel efficiency for new passenger vehicles entering the U.S. market, according to industry analysts Baum & Associates.
In a press release the company stated that the country reached this record mile per gallon level without relying on higher small car sales – a significant shift from a pattern going back to the 1973 Arab oil embargo where similar gains were achieved only when consumers moved to smaller vehicles in the face of higher gas prices.
From January to June of 2012, the average fuel efficiency of new passenger vehicles was 23.8 mpg, improving by 1.1 mpg the record of 22.7 mpg set over the same six months in 2011. Baum & Associates calculated the average fuel efficiency using monthly fuel economy data from the University of Michigan and sales data from Wards Automotive.
Importantly, the projected new auto sales figure for 2012 is 14.2 million units, up a strong 1.5 million vehicles over 2011.
“Thanks to a bumper crop of fuel efficient models in the most popular segments, consumers don’t have to choose between fuel efficiency and performance,” said Alan Baum, principal of Baum & Associates. “No matter what type of vehicle you want, midsize car, minivan, SUV or pickup truck, carmakers are now upping fuel efficiency performance across the board. The new era of auto fuel efficiency is truly here.”
Baum pointed to three key factors accounting for these trends that fly in the face of past experience during periods of high gas prices:
• There are now significantly more fuel-efficient vehicle choices of all sizes for consumers. The number of high fuel efficiency, high volume vehicle models has more than doubled since 2009 from 28 to 60, according to analysis by Baum & Associates. These include fuel-efficient models of small cars, midsize cars, and crossovers (CUVs). A May 2012 Consumer Reports survey showed that fuel efficiency is by far the #1 concern for prospective auto buyers.
• Consumers are buying larger fuel-efficient vehicles, not just small high-MPG cars. In an important shift, the 2012 year-to-date increase in the market share of small cars and crossovers over the same period in 2011 is just 0.4 percentage points. (By contrast, sales of small cars and crossovers jumped by a much larger 4.8 percentage points during the previous period of high gas price from 2007 to 2009.) The important shift here is that consumers are embracing larger fuel-efficient vehicles.
• A “perfect storm” of factors coincided with industry roll-out of vehicles under new federal higher MPG standards. Model year 2012 is the first year of a long-term federal program that requires an average laboratory rating of 35.5 mpg by 2016, equivalent to a label average of about 27.3 mpg. Final rules expected next month will raise the standards even further to an average laboratory rating of 54.5 mpg by 2025. In 2012, the increased availability of more fuel-efficient models to meet these standards coincided with high spring gas prices, creating a perfect storm of an ample fuel-efficient car supply in every segment just in time to meet surging consumer demand.
“Simply put, the fuel efficiency standards are working and in fact, are exceeding our expectations,” said Luke Tonachel, vehicles analyst at the Natural Resources Defense Council (NRDC). “These standards are doing exactly what they are supposed to do: delivering the fuel-efficient cars that consumers clearly want. We look forward to the continued improvements and more fuel-efficient choices that the 54.5 mpg standards will bring.”
Based on the year-to-date sales data from model year 2012 (October 2011 to June 2012) as tracked by the University of Michigan, the U.S. fleet fuel efficiency average is poised to exceed government regulators’ predictions of a fleet wide average of 23.4 mpg for model year 2012.
Editor’s Note: This is a review written by Jeff Johnston. His Motor Matter column runs in the Washington Times and other newspapers. He also is a contributor to RVBusiness.
More fuel-efficient is definitely “in” these days when it comes to RV products. Manufacturers are coming up with interesting, new, smaller motorized and towable options for those looking for something a bit different to fit today’s economic sensibilities.
Motorhomes based on the Dodge Sprinter van, both the full van and cutaway chassis, are popular and commonplace today. Winnebago Industries Inc. has gone one step further with the introduction of its all-new 2010 Via Class A motorhome.
The Via and its Itasca equivalent, the Reyo, are based on the Sprinter “cowl” chassis that’s currently being imported exclusively by Winnebago. This chassis allows the company to design its entire coach from the ground up, as is typical for any Class A motorhome, instead of working with the Sprinter cab or body features used on the earlier models.
At 25 feet long, the Via is a compact vehicle, yet it offers full-featured livability and comfort. At the same time, its 154-hp Mercedes-Benz 3.0-L turbo-diesel 6-cylinder engine delivers fuel economy numbers considerably higher than the average gas-powered Class A and better than various front- or rear-engine diesel-powered rigs on the market.
Sprinter-van-based Class B motorhomes are reported to achieve as much as 20-plus mpg. Winnebago hasn’t released any fuel economy figures yet, but it’s reasonable to presume that the Via will achieve lower numbers than the smaller van-based rigs, but still better than a V-8-powered coach.
Contemporary body styling and graphics give the coach visual appeal, and the interior abounds with smooth, rounded surfaces and next-generation-looking cabinets. It’s a rig that likely would please the most persnickety type who doesn’t want just another box on wheels.
The Via starts at $135,132 base MSRP. That’s not cheap, but long-term fuel savings make it a viable investment option.
True North Freelance OSV
The interest in downsized trailers means more RV manufacturers are treading the fine line between an RV and a simple enclosed place to sleep on wheels. Northwood Manufacturing Inc., a company long known for building functional and high-quality RVs designed by outdoors enthusiasts, has developed a new small trailer that fits a variety of recreation product niches.
The new Freelance Outdoor Support Vehicle (OSV) by Northwood’s True North division is an exciting addition to the smaller-RV market. It resembles one of the classic teardrop-style trailers on steroids and offers a wide variety of equipment and function options.
In essence, it’s a 1,535-pound trailer with a sofa that folds down to a bed, a rear lift hatch that covers a kitchenette unit and several exterior-access storage compartments. Its rounded front and sloped aft end help with aerodynamics, and the unit’s 16-foot, 4-inch length means it can be stored in many garages.
As with a teardrop, users need to bend over inside as the entire rig is just 6 feet 9 inches tall overall from ground to roofline. Inside, it’s just the sofa/bed that folds down to 48 x 77 inches, some mesh storage pockets, and extra open storage space. A lower-level access hatch provides pass-through long-item storage capability.
And that’s still a lot more luxurious than the average tent. The Freelance OSV is aimed at those who want to make the leap from a tent into an RV without a lot of complications or cost. This rig retails for about $8,250 base MSRP, and heads up to closer to $13,100 fully equipped.
Users can opt for the base package or equip the Freelance OSV with a wide variety of options including a complete array of Thule rack-mount storage and sporting-toy-mount or camping accessories.
The Freelance OSV is an interesting and versatile new option for first-time RVers or those wishing to expand the flexibility of their leisure time activities.
Chalet RV: Moving and Shaking
The product designers at Chalet RV Inc. have been busy with a new model aimed at the lightweight towable market. A company spokesman said the product would be ready for introduction very soon, pending some final detail touches on the first model.
While it’s no big news to build a lightweight RV these days, the big difference lies in how your lightweight compares to the other guy’s product.
The new Chalet model is said to break new ground in that regard and will offer full livability features, including a dry bath, in a very compact size. It’s not a fold-down, like another popular Chalet product line, and it’s not a teardrop, although it blends elements of each.
It also uses wide-body design to help achieve extra interior space.
Camping World has launched a “Cash for Campers” incentive, giving up to $7,500 cash allowance for motorized RVs when current RV owners purchase a new vehicle.
It is designed to mirror the the government program “Cash for Clunkers” currently supported by the automotive industry and Department of Transportation.
Camping World’s self-funded recycle and save initiative is focused on improving the quality of vehicles currently in circulation as well as stimulating the economy in heavy-hit manufacturing states such as Iowa and Indiana, according to a news release from the Lincolnshire, Ill.-based retailer. The “Cash for Campers“ program incentivizes RV consumers to transition into new and more fuel-efficient motorized RVs when they trade in an older, less fuel-efficient model.
Camping World has aligned itself with the three top selling motorhome manufacturers who are leading the charge toward improving environmental issues with efforts in such areas as chassis selection, fuel savings through design and long-term durability. These changes are evident in their current motorhome line-up such as the Winnebago View and Navion, Damon Avanti and Four Winds Serrano.
Marcus Lemonis, Camping World chairman & CEO, said, “As the market leader, Camping World currently retails over 18% of all new motorhomes sold in the U.S. We believe that an accelerated transition of the current installed base ultimately accomplishes several important goals: to remove less fuel efficient models from the roads, increase the demand for new and more efficient motorhomes which will ideally result in assisting the RV manufacturers in putting people back to work.”
Camping World also plans to permanently retire less fuel-efficient models ages 1984 and older through a salvage process. Lemonis further detailed, “If a consumer owns a less fuel-efficient and less technologically advanced motorhome and is interested in trading it in through the”Cash for Campers“ program, their unit is eligible for a cash allowance toward select new models at Camping World.”
The company expects to launch similar programs in the near future on recycling towable models as well as select RV accessories with more details to be released as plans get underway.
More details about the program can be found at CampingWorld.com/cashforcampers.
Editor’s Note: The following column by writer Joseph B. White appeared in Tuesday’s Wall Street Journal.
Can auto makers boost the overall fuel economy of American cars and trucks by 40% in seven years without forcing everyone into a Smart ForTwo? They’ve done it before and should be able to do it again, but it could be a bumpy transition.
Between 1975 and 1987, the average fuel efficiency of American cars and trucks improved by nearly 68%, according to the Environmental Protection Agency. This was a remarkable achievement, but it came at considerable pain and discomfort both to auto makers and consumers. Cars such as the compact Cadillac Cimarron — a rebadged Chevy Cavalier — didn’t do much to boost General Motors Corp.’s overall fuel economy, but did plenty to damage Cadillac’s brand image.
Even Japanese car makers, which benefited tremendously from America’s energy consciousness and the resulting mileage mandates, have little nostalgia for the tiny, modestly powered cars of that era.
Now, President Barack Obama’s plan for auto makers to boost the average fuel efficiency of their fleets to 35.5 miles per gallon by 2016 sets up auto makers and U.S. drivers to replay the 1970s and 1980s experience — with some critical differences.
Based on the way new federal fuel-economy standards will likely work, and on the industry’s history in dealing with new efficiency mandates, people who like big sport-utility vehicles or pickups may want to pounce on them over the next several months, while they’re still cheap and plentiful.
Fans of small, fuel-efficient cars or hybrids might find irresistible buying opportunities in the current market, too, if they’re willing to make do with today’s technology. Another potential upside: Riding out the next six or seven years in a 2009 model buys time for car makers to work out the kinks in their new-generation, high-mileage cars.
Since gas prices fell below $3 a gallon, demand for very small cars and hybrids has cratered. AutoNation Inc., the nation’s biggest dealer chain, has enough Chevrolet Aveo subcompacts on hand to last 560 days at current sales rates. In July 2008, when gas prices were peaking above $4 a gallon, AutoNation had a relatively lean 33 days’ supply of Aveos on their lots.
AutoNation’s inventories of the Honda Fit, a car that meets the 2016 mileage target right now, have surged to an unhealthy 147 days’ supply, compared with just 17 days’ supply last July. Dealers who wanted premiums for hybrids and small cars a year ago now are offering discounts.
This is one reason why AutoNation Chief Executive Mike Jackson is a tireless advocate of coupling higher mileage standards to higher federal gasoline taxes, a position many industry executives share.
But SUV and pickup fans don’t need to fear that the 2016 federal mileage rules will send these vehicles the way of the woolly mammoth. In fact, the new framework for fuel-economy standards could be relatively easier on large vehicles than on very small cars.
Under the new system, all vehicles won’t need to average 35.5 miles per gallon. They will need to meet or exceed a target adjusted to their size, or “footprint.” So, for example, a Chevy Tahoe, which has a footprint of 55 square feet, is required to get about 23 to 24 miles per gallon in 2011 and improve from there, under government rules already adopted for that model year. A smaller truck, such as a Toyota Highlander, is supposed to achieve about 26 miles per gallon in 2011 and then improve from that base over time.
What’s more, there’s more room for weight reduction with larger vehicles. “Weight can be found in a lot of creative places,” says Tom Stricker, director of technical and regulatory affairs at Toyota Motor Corp.’s Washington office. Mr. Stricker says the details of how the president’s 35.5-mile-per-gallon plan will affect different sizes of vehicles are still to be determined, and he and his counterparts at rival auto companies are getting ready to “roll our sleeves up” to hammer them out over the next several months.
Still, costs for larger vehicles will likely rise. Sandy Stojkovski, director of product systems for Ricardo Inc., a consulting firm that has worked with the government on its fuel-economy policy, says it could cost $5,000 to $12,000 per vehicle to achieve the required improvements in fuel efficiency for medium and large trucks, depending on the technology car makers choose. The Obama administration has put the estimate of increased cost per vehicle at a more optimistic $1,300.
Mr. Obama’s auto policy is founded on two big bets. The first is that oil prices will go up a lot by 2016, spurring demand for cars that are smaller, more efficient, more electric and probably more expensive, pound for pound.
The second wager is that auto makers will repeat history, in a good way. After initially struggling to meet tougher mileage benchmarks in the 1970s and 1980s, car makers used innovative designs and technology to create 2008 model vehicles that not only were nearly 60% more fuel-efficient than the 1975 average, but were 32% faster from 0 to 60 miles per hour, and met a wider array of functional needs.
Mr. Obama says more-aggressive fuel-economy targets will cut America’s consumption of oil. But despite the gains in vehicle efficiency, Americans burned 39% more gasoline in 2007 than they did in 1975, according to Energy Department figures, because more people hit the roads and drove more miles.
Don’t share the president’s optimism? Then consider buying one of today’s models soon. There are plenty of them around.
Write to Joseph B. White at email@example.com