Paying the price for mileage
Car buyers will pay higher prices as automakers face a cost increase -- up to $85 billion according to the auto industry -- to comply with the 35-mpg fuel economy standard President Bush signed into law on Wednesday.
Of course, I'm never too ready to take the numbers of the industry who have been fighting like the devil to keep the mileage standards low on how much it will cost them to meet the higher standards, and I have very little sympathy for them in any case. A large part of the reason is from later in the article:
Congress first adopted a Corporate Average Fuel Efficiency standard in 1975 with the goal of raising the average fuel economy of the nation's cars to 27.5 mpg by 1985. Automakers scuttled efforts to increase the standard for more than 20 years. But the momentum against them reached critical mass this year amid mounting concerns in recent years over global warming, rising fuel prices and oil dependence. So the industry joined environmentalists and lawmakers to broker a compromise.
The Energy Bill raises the average fuel efficiency of automakers' fleets from 26.4 mpg to 35 mpg by 2020 and mandates a six-fold increase in biofuel use to 36 billion gallons within 15 years. The changes are expected to save 1.1 million barrels of oil per day.
Basically these guys have spent the last twenty years reducing gas mileage and are now complaining that it will cost them a lot of money to get to a standard they probably could have easily surpassed already. And that 2020 standard is one that most European and Japanese automakers can already meet.
So why, you might ask, should we have to pay more for the "Big 3" of Detroit to catch up to the rest of the world? I mean, shouldn't we just be able to go out and buy the vehicles that the Europeans and Japanese are buying? I mean, that it what "Free Trade" is supposed to be all about, isn't it?
Of course, the Free Trade advocates only advocate for industries where they have the advantage. As soon as the free trade of goods can cut into their bottom line, watch as they pull all sorts of protectionist crap out of their asses. A good recent example in the auto industry can be found at the US-Canada border, where NAFTA was supposed to drop such barriers, thanks to our dollar reaching parity with the US greenback.
A Honda Accord EX, for example, starts down here at $23,060 in American dollars. The same car in Toronto costs $27,490 Canadian.
Honda's Odyssey EX minivan costs $28,960 US here, as opposed to $36,990 in Canada. At this writing, the currencies are virtually at par.
At the more exotic end of the new car scale, the differences are staggering. GM's Corvette coupe, for example, starts down here at $46,225 US In Canada, it's $70,920.
A Cadillac sedan in the States starts at $50,350 US In Canada, $67,220 Canadian.
. . .
The fact is, though, business loves being regulated, at least when it's in their interest. So when the Canadian government promulgated a new regulation in September, stipulating a standard for anti-theft immobilizers in new cars sold in Canada, the car manufacturers, anxious to keep the two markets separate, stampeded to comply.
But it's the same device!
In short order, companies like Honda and GM stated that none of their new, 2008 American models complied with Canadian standards and therefore, regrettably, had to be declared inadmissible to Canada.
In fact, in Honda's case at least, the immobilizers buried in the guts of its American-sold vehicles are identical to the immobilizers in the cars it sells in Canada. Precisely the same, right down to the last wire.
But Canadian government was asking the manufacturers to make the casing housing the immobilizer a little more resistant to cracking. That provided the excuse to declare it inadmissible.
As a result, Transport Canada banned import of the much cheaper American cars. The ones that cost thousands less. What's more, it did it, the department says, for Canadians' own good.
So no worries for the "Big 3". The governments will find asinine reasons to bar the import of cheaper foreign cars that meet the mileage standards so that the North American consumer will be forced to swallow the higher sticker prices of the domestic car producers and, in effect, subsidize the research and development they should have been doing for the last twenty years or so.
