How much will it cost you when you buy that new car?

The only problem is, based on what we know now, it'll cost automakers some $85 billion to comply. When all costs are factored in, other estimates put the total cost at about $18 billion a year.

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"We've done even more research," [GM Vice Chairman Bob] Lutz said, "and (the cost per car of new CAFE standards is) going to be in the range of $4,000 to $10,000, with an average of about $6,000."

And that will be on every car -- even though there are vehicles (like the one I drive) that already meet the standard. The automakers are just going to have to raise all prices to absorb the cost of meeting the new standards -- there are no two wys about it. After all, that is how any business sets its prices -- by taking into account all costs.

And what does it mean to the consumer?

Let's put that in perspective. The average cost of an automobile in 2006 was $27,958, according to the Comerica Automotive Affordability Index. So our new energy bill is, in effect, going to be a 21.4% tax hike on the current car prices. Oh, didn't they tell you that?

That's right -- my car that cost $15,000 will end up costing close to $20,000 just based upon this new regulatory cost -- effectively a hidden tax. And what will that mean as my car gets older?

In fact, the higher prices of cars will encourage consumers to keep their older, dirtier but cheaper vehicles for much longer. So the actual benefits will be less than forecast.

History bears this out. In 1970, just before the first CAFE standards were imposed, the average car on the road was about 5 1/2 years old. By 2000, the average car was 9 years old — thanks to the higher costs of buying and operating new cars, a direct result of higher fuel efficiency and safety standards.

Yep -- my car will be in service until it literally cannot move. That means that instead of driving it until 2011 or 2012, I'll be driving it until at least 2015 or 2016, because that extra chunk of cash will put a new car out of my reach (after all, we know how small teacher raises have been here in Texas).

And that doesn't even get into the auto safety issues.

Higher prices. More pollution. Unsafe cars. That is the legacy of this new legislation.

Posted by: Greg at 10:49 PM | No Comments | Add Comment
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