Defour Group is a consulting firm of retired automotive public policy executives who specialize in the economics of environmental regulation.
To the Editor:
I agree with Keith Crain that "without substantially higher gasoline prices ... it will be nearly impossible to market high-mileage cars in any great numbers" ("If you build it, they will come," April 4).
Consumers do not rate the attribute of fuel economy as highly as a simple cost/benefit analysis might suggest. While the reasons consumers behave as they do are complex, the impact of their behavior is predictable.
Defour Group economists adjusted the government's cost/benefit analysis justifying the proposed 2017-25 model year fuel economy standards to reflect actual consumer behavior. We found that even in the most favorable case of high oil prices and the lowest proposed fuel economy target of 47 mpg, consumers still would not buy enough high-mileage vehicles to support the standard.
In that scenario, we predict that sales in 2025 would fall by 270,000 units and more than 37,000 jobs would be lost in the automotive sector. In the least favorable case of low oil prices and the highest proposed standard of 62 mpg, sales would fall by 4,800,000 units and 670,000 jobs would be lost.
While it is well understood in the industry that vehicle fuel economy must improve continually, the economy suffers if we try doing too much too fast. Past increases in fuel economy standards were successful only because rising fuel prices created a market for more fuel-efficient vehicles. There is no reason to expect the future to be any different.