There was a good bit of automotive news today. After yesterday announcing coastal offshore drilling exploration, the Obama Administration today published final rules on new CAFE standards. Starting for new cars with a model year of 2012, the EPA & National Highway Traffic Safety Administration (NHTSA) will mandate & regulate bump ups in U.S. car and light-truck fleet average fuel efficiency, until bringing it to a combined (city/highway) average of 35.5 miles per gallon by 2016.
Also, the car industry released their March sales figures. It might not be the best of indicators for economic recovery, but whether & how car sales are recovering might have some significance. Overall, new car sales jumped 27% in March over the same month last year. So did Toyota rebound from "unintended acceleration" stories? How are General Motors & Ford doing?
These and some other auto related stories below the fold.....
► According to Transportation Secretary Ray LaHood and EPA Administrator Lisa P. Jackson, the new requirements will save 1.8 billion barrels of oil (or the equivalent of taking 58 million cars off the roads for a year) over the life of vehicles sold under the program covering the 2012-16 model years.
From the NY Times:
The federal government issued final rules establishing the first greenhouse gas emissions standards for automobiles and light trucks on Thursday, ending a 30-year battle between regulators and automakers.
The new tailpipe rules, jointly written by the Department of Transportation and the Environmental Protection Agency, set emissions and mileage standards that will translate to a combined fuel economy average for new vehicles of 35.5 miles per gallon by 2016. Most drivers will see lower mileage figures in real-world driving.
The rules are expected to reduce emissions of carbon dioxide and other heat-trapping gases by about 30 percent between 2012 and 2016.
Some other notes about these new standards (here's the EPA Fact Sheet):
- The new rules are estimated to cost automakers $51.5 billion over five years, and add about $1,000 to the cost of the average new car by 2016. However, it will save "the owner of an average 2016 car $3,000 in fuel costs over the life of the vehicle and eliminate emissions of nearly a billion tons of climate-altering gases over the lives of the regulated vehicles."
- NHTSA is predicting the 2012 numbers will be 33.3 for cars and 25.4 for trucks in 2012, rising to 37.8 for cars and 28.8 for trucks by 2016.
- Credits will be given out for vehicles that can run on E85 (ethanol), though automakers will need to prove their cars are running on the alcohol fuel by 2015 to continue earning the credits.
- Under the so-called "German Rule", automakers that sold fewer than 400,000 cars in 2009 will get a less stringent greenhouse gas standard, that will be limited to up to 100,000 vehicles total, spread over 2012-2015.
- In concert toady, Canada adopted identical emission standards for its vehicles. Canada's environment minister, Jim Prentice, said his government was "pleased to be taking this step to further harmonize our climate change action with the Obama administration -- a step that will protect our environment and ensure a level playing field for the automotive industry."
- In addition to the fuel economy standards, a
minimum maximum for the amount of CO2 a car's tailpipe can emit has been adopted as well: it'll be 250 grams per mile by 2016.
- The Alliance of Automobile Manufacturers, the trade group representing Detroit's Big Three, Toyota Motor Corp. and seven others, praised the announcement. But it wants the government to start working on the rules for 2017 and beyond. "America needs a roadmap to reduced dependence on foreign oil and greenhouse gases, and only the federal government can play this role," said Dave McCurdy, president & CEO of the alliance. "The national program announced today makes sense for consumers, for government policymakers and for automakers." Transportation Secretary LaHood said "post 2016 work will begin as soon as the ink is dry."
- There will also be "Advanced Technology Credits" that will give automakers an incentive on the first 200,000 plug-in hybrids and electric vehicles built by 2016. However, automakers object to the ability of the Administration to set a "compliance value" after the 200,000 or so cars, that will be based on the greenhouse gases emitted by the power plants the vehicles are getting their juice from.
Now, I'm sure some out there are thinking to themselves "
Pfft... 35.5? I had a car that had better than the 35.5 mpg 30 years ago." Well, yes & no... Actually, no.
Even though the commercial above claims 37/56 mpg, the EPA fuel efficiency average is calculated differently than it was in 1984. Until recently, the EPA tests didn't simulate real-world driving. That's why if you go on YouTube, you can find a bunch of old car commercials claiming outrageous fuel efficiency stats. Add into this that anything from 20 or 30 years ago is also going to put out more emissions than current models.
There's also the factors of weight & standard things on present-day cars that weren't on the old cars. That Ford Escort in the commercial might have had (flawed) high mpg numbers, but I doubt it had driver & passenger air bags, let alone side impact airbags. It didn't have traction control, anti-lock brakes, or a host of other safety systems that are standard issue on modern automobiles. All of those things add weight, and decrease fuel efficiency.
► Also today, the March sales figures for the Automobile industry were released. According to the data, there were 294 dummies that still bought HUMMERs last month in order to confirm to the world their small penises.
Toyota did bounce back last month from their bad press, but they had to do it by offering (what is for them) a record level of incentives (rebates, 0% financing, etc.). Both Ford & General Motors had good sales figures (with both having their core brands see a higher volume % change than Toyota's when compared to the same month last year), although they're pumping out incentives just like Toyota. However, that brings up the question of whether these numbers are a return to "normal", or if they're being propped up by incentives that aren't sustainable. Time will tell.
From AutoBlog:
And speaking of those incentives, Chrysler (now run by Fiat) had the second highest costs for incentives, and is the car complany that had a sales decline. Can you just not give away a Chrysler nowadays?
Toyota, after recalling more than eight million vehicles worldwide as it tried to resolve complaints about unintended acceleration, focused on pushing sales last month with deals that it described as unprecedented. Toyota buyers could get zero percent financing for five years or low lease payments on many models.
G.M., Ford, Honda and Chrysler were among the other carmakers dangling no-interest loans in front of shoppers. But G.M. said its overall spending on incentives fell by 42 percent, or $2,000 a vehicle, from a year ago.
G.M.’s vice president for United States marketing, Susan Docherty, said a quarter of vehicles sold were new for the 2010 model year and came with very few discounts. G.M. does not want to begin relying on incentives again to artificially raise sales, she said. "We’ve been down that road before and we know it’s a dead end," Ms. Docherty said on a conference call. "It’s really important that we earn our market share. We’re not interested in buying it."
(Source)
Piggybacking off of these numbers & incentives, a study released this week by R.L. Polk & Co. found that in the 15 months between July 1, 2008 to September 30, 2009, showed that 14.8 million vehicles were scrapped, while registrations of new vehicles totaled 13.6 million. That's the first time that's happened since R.L. Polk & Co. started tracking car owning patterns since 1948 (one caveat, the study includes months in which Cash for Clunkers was going on).
One way to look at the numbers is as a foreshadow of "pentup demand", with the assumption those vehicles will be replaced. However, the other way to look at the numbers is that people might be pulling back from the idea of buying a second new car, or a car for Junior.
From the Detroit Free Press:
Demographic changes such as baby boomers’ down-sizing their housing and cars and growing evidence that consumers now in their 20’s are more likely to buy used vehicles than their predecessors a decade ago mean new cars won’t replace every clunker that hits the recycling yard, Miller said.
"Cash-for-clunkers did assure a one-for-one replacement, but we just can’t assume that when those programs end," Miller said. "We may see scrappage exceed new vehicles sales at least through this year."
► According to USA Today, with many cities & local governments looking at deficits, what do you figure they think the best way is to raise funds? If you answered have police officers write more tickets, you just won a gold star.
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As cities and states scramble to fill budget gaps with revenue from traffic citations, "not only are the (speeding) tolerances much lower, but the frequency of a warning instead of a ticket is way down," says James Baxter, president of the National Motorists Association, a Wisconsin-based drivers' rights group that helps its members fight speeding tickets.
"Most people, if they're stopped now, are getting a ticket even if it's only a minor violation of a few miles per hour," Baxter says. He cites anecdotal evidence of drivers being pulled over at slower speeds.
Tim Davenport, 42, of Kansas City, Mo., was recently stopped on 15th Street in Blue Springs, Mo., and ticketed for going 40 mph in a 35-mph zone — although the police officer initially ticketed him for 40 in a 25, he says. "I drove down that road again, and the posted limit was 35," he says. "I figured the judge wouldn't accept that, since I was over the speed limit, and would still charge me with it. So I went ahead and paid" the $60 ticket.
From The Truth About Cars:
Unsurprisingly, the officers quoted in the story insist that they enforce the law no matter what, but USA Today points to a study that showed local citations typically go up in years after a tax revenue shortfall. Meanwhile, Canton, OH, gave out four times as many tickets in January as they did in January 2009, more jurisdictions are considering "super speeder" tickets, and we’re even seeing taxes on speeding tickets. Hell, even public transportation is figuring out that more enforcement equals more cash. None of which should come as much surprise at all: TTAC’s "speed law" expert Casey W. Raskob warned motorists of the dangers of cash-starved local governments over a year ago. So, whether you live in a state that actively targets motorist-based revenue or not, watch out. Speed kills... budget shortfalls.
► Yesterday, the first pre-production Chevy Volt (General Motors' new plug-in hybrid electric vehicle) went down the assembly line at the Detroit Hamtramck Assembly Plant.
Today it was announced the United States government will likely buy the first 100 Volts.
The White House said Wednesday that the government will "purchase the first 100 plug-in electric vehicles to roll off American assembly lines" before the end of the year. The Volt, which GM describes as an extended range electric vehicle, is the only model fitting that description.
However, the Volt will have some foreign competition, not only from Toyota's Prius, but also the new Nissan Leaf.
The two cars are a bit different. The Leaf is all electric, with a claimed range of about 100 miles (although, some have disputed this estimate). The Volt is electric too, but with a range of about 40 miles (a range within the daily commute for about 75% of Americans according to General Motors). However, when the charge starts to run out on the Volt, the car's 4-cylinder gasoline internal combustion engine creates electricity to extend the range another 300 miles.
Chevrolet still hasn't set a firm price on the Volt yet, but there's been speculation the car will have a price tag around $30-32,000 once tax rebates are accounted for. This week Nissan announced their price for the Leaf: about $25,000 after tax rebates.
From TreeHugger:
Nissan's fully-electric LEAF will hit the US market by the end of this year, but until now, pricing has been only rumor and hearsay. The fully-electric four-door will hit select markets in December and go nationwide in 2011. The price for the basic model is $32,780, but a federal tax credit of $7,500 brings it to $25,280. Individual states also have tax rebate programs, which brings the price down further; California and Georgia both offer an additional $5,000 rebate. To charge the LEAF at home, customers will have to buy an install a special charger, which Nissan estimates will cost $2,200 installed. Although Nissan has backed down on plans for a split sell/lease program for the car and battery, the entire LEAF can be leased for $349 per month.
► Finally, the NUMMI (New United Motor Manufacturing, Inc.) plant in Fremont, California closed today.
The NUMMI plant ceased production after more than 25 years Thursday when a red Toyota Corolla glided off the factory's assembly line, putting 4,700 people out of work and closing a landmark chapter for corporate America.
The latest podcast (#403) from Chicago Public Radio's This American Life has a fascinating look at the history of NUMMI, and the lessons that were & were not learned from the experience. This American Life asks whether the entire affair was a lost opportunity that could have prevented General Motor's bankruptcy, and in a final denouement, whether Toyota is repeating some of the same mistakes GM made a quarter century ago?
Originally opened & operated by General Motors between 1962 & 1982, GM & Toyota reopened the factory as a joint venture in 1984 to manufacture vehicles to be sold under both brands. Why would competitors do this?
The purpose of the plant was to allow GM to learn about Toyota's Production System in order to improve vehicle build quality & lower production costs, which could be expanded to all GM plants, while also giving Toyota its first manufacturing base in North America.
However, even though the jointly operated NUMMI plant made significant improvements in efficiency & car quality, General Motors was not receptive to expanding the lessons the deal was designed to foster. And This American Life spreads the blame around for why that was. Even when confronted with evidence of a better way, there were those within General Motors more interested in doing things the way they've been done, keeping volume up & the production line moving, rather than making sure the cars were built correctly from the beginning. Some within the United Auto Workers (UAW) membership were also interested in doing things the way they had been done, and fought Toyota's "TEAM Concept" because of its effect on worker seniority.
Issues like these would keep GM (and Ford & Chrysler for that matter) from making changes for decades. A recent NY Times story has a graph showing how GM & Ford have made great strides, and for the past couple years have had lower consumer complaints filed with the National Highway Transportation Safety Administration than Toyota. But the anecdote below is interesting in illuminating how they've done it.
The history of quality is a slightly sore subject for American automakers. Ford’s vice president for global quality, Bennie Fowler, will gladly explain that it now takes just 72 hours for warranty claim information to flow from a dealer’s repair shop to the factory floor, where a manufacturing adjustment might be needed. He’s less eager to discuss the past, when that same journey took 30 days.