CAFE adherence proved good things can come in small packages

FROM THE ARCHIVES

This story originally appeared in 100 Events That Made the Industry, an Automotive News special issue published on June 26, 1996.

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The 1970s didn't become extinct without a fight.

It took laws, two massive oil shocks and an influx of Japanese cars eating market share to put Detroit's gas-guzzlers on a diet.

Like the dinosaurs that once ruled the earth, monstrously big cars once dominated America's roadways. Dino-saurs died because they were starved. Big cars were downsized because they ate too much.

But the big car of the 1970s did not become extinct without a fight. It took laws, two massive oil shocks and an influx of Japanese cars eating market share to put Detroit's gas-guzzlers on a diet.

When the first major Arab oil embargo hit in 1973, the average fuel economy of the Big 3 car fleet was 13 mpg. And buyers suddenly developed a taste for smaller and more fuel-efficient cars.

Domestic makers were in a quandary. Not really knowing whether the boom in small-car sales would continue, the Big 3 started to downsize their cars anyway. Market share was market share.

The second blow came quickly afterward and left them little choice. It was the Energy Policy and Conservation Act of 1975, mandating that makers selling more than 10,000 cars a year in the United States must meet fuel economy standards.

The following year, a standard known as corporate average fuel economy, or CAFE, was issued, requiring makers to meet a fleet average of 18 mpg by 1978 and 27.5 mpg by 1985. Makers who failed to meet the standard would be slapped with fines.

The law also directed the Department of Transportation to set car CAFE standards for 1980-94 and to draft requirements for light trucks.

Detroit acknowledged there was some need to downsize; after all, the buyers were rushing to the foreign competition's smaller vehicles. But Detroit didn't swallow CAFE without a fight. The government was dictating what kind of cars the industry should make.

Before the law passed, the auto industry argued for an increase in the gasoline tax so consumers would have more incentive to buy smaller cars. But Congress, sensing the unpopularity of a gas tax, wouldn't budge, despite Detroit's arguments that market forces rather than laws would change the size of cars. Washington wanted to show it had taken measures that would theoretically force the public to conserve gas.

Congress, of course, ignored the fact that an increase in the gas tax would conserve fuel immediately. Downsizing would take several years and, for a long time, it would apply only to those who could afford new cars.

The industry had support in the CAFE fight, perhaps more than in the scuffles over safety and clean air. In an essay written in the late 1970s, 'Mandated Fuel Economy Standards as a Strategy for Improving Motor Vehicle Fuel Economy,' three employees of the Department of Transportation said the decision to regulate product rather than use taxes or 'other price-oriented approaches' to curtail fuel consumption 'was not unanimous' during the three-year fight over CAFE that began in 1973.

Indeed, the administrator of the U.S. Department of Energy was forced to resign in 1974 because he backed the gasoline tax.

Although the CAFE fight appeared more winnable than other battles with regulators, the industry's lack of perceived willingness to accept prior safety and clean-air standards didn't help its credibility on Capitol Hill.

For instance, the Big 3 said in 1976 they could not meet the 1981-84 increases in fuel economy requirements. But five months later, when it appeared they would lose, they said they could.

Pete Estes, president of General Motors, explained the industry's about-face at the 1977 Automotive News World Congress in Detroit: 'In dealing with the government, and in raising questions and explaining the possible difficulty and costs, we have reinforced the negative image that many people have of us - I don't know how it can be avoided.

In all honesty, we have contributed to this lack of credibility' said Estes, 'because we wanted to see some promising results with real hardware before we predicted our ability to make progress in meeting some of these standards and rules.'

Estes admitted that in 1976, the industry said: 'We didn't know how to meet the 27.5 mpg fuel economy average for 1985 except by building 92 percent Chevettes. That was the case at the time, and in saying so, I didn't mean that we were not working to do better.'

He said makers changed their politicking because they were 'going to take the risk' that they could meet the standard in the 1980s 'and still provide a reasonable mix of attractive vehicles that will meet most of our consumers' transportation needs.'

The industry's foes were also at work. At that same Automotive News conference, Joan Claybrook, NHTSA administrator, said it would not be unrealistic to seek averages of 40 or 50 mpg in the future.

Imported cars had no problem meeting the standards, and they were used as an example to show that Detroit could do the same. To meet the initial standards, the domestics didn't have to reinvent the wheel. General Motors had already downsized the Chevrolet Caprice and other B-body cars for the 1977 model year.

The first round of downsizing through 1978 was accomplished by sheer weight and size reduction. The first crop of smaller models like the Chevrolet Chevette, Dodge Omni and Plymouth Horizon were all, on average, 300 pounds lighter than the previous generation of entry-level cars.

Detroit also put in front-wheel drive and substituted four- and five-speed transmissions for three-speed. Turbocharging was added to improve the ailing performance of smaller engines.

Cars in 1980 using some of that technology included GM's X cars (the Chevrolet Citation, Pontiac Phoenix, Buick Skylark and Oldsmobile Omega). That year, Ford's intermediate Thunderbird and Cougar XR7 also got smaller and lighter.

With 1981 came the debut of the fwd Ford Escort, Mercury Lynx, Dodge Aries and Plymouth Reliant. GM had its fwd J cars, the Chevrolet Cavalier, Pontiac J2000, Cadillac Cimarron, and the Oldsmobile Firenza and Buick Skylark arrived a year later. Pontiac got the T1000, its version of the Chevette.

In 1981, Ford also trimmed 400 pounds off the Ford EXP and Mercury LN7.

The difficulty began in the later years. Meeting CAFE through 1985 required new and costlier technology, said Dick Kinsey, fuel economy planning manager for Ford Motor Co.

Media estimates at the time said the industry had to spend more than $50 billion to meet the mid-1980s standards.

And in meeting CAFE, the domestics often produced cars that had poor performance and handling when compared with their Japanese competitors.

We blame CAFE for Asians obtaining the market share levels they got,' Kinsey said.

Today's cars are trimmer because of downsizing and are no longer inferior performers. Ditto trucks. Light-truck CAFE originally was set in 1979 at 17.2 mpg for two-wheel-drive trucks and 15.8 for four-wheel-drive trucks. In 1992, the distinction between 2wd and 4wd was dropped. The current standard is 20.6 mpg for both types.

Whether CAFE has been effective and whether it was really needed is still being debated.

The government has not increased the passenger-car standard above 27.5 mpg, and cars are no longer shrinking. The industry says consumers still want larger cars, and the price of gasoline hasn't increased as predicted.

The regulation was made in the '70s when they were predicting fuel prices in the $3 range in 1970 dollars. All that has failed to bear fruit, and we are stuck with a law today that was based on faulty premises in 1973,' said Kinsey. 'CAFE has been a total failure in reducing dependence on foreign oil.

You can reach Diana T. Kurylko at dkurylko@crain.com. -- Follow Diana on Twitter

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