TRAVERSE CITY, Mich. -- Regulators can impose stricter mandates and manufacturers can stretch to meet them, but it will mean little if showroom customers can't afford the advances in fuel economy.
That was the message to industry executives last week at the Center for Automotive Research's Management Briefing Seminars here from Wes Lutz, owner of Extreme Chrysler-Dodge-Jeep-Ram in Jackson, Mich., who is the regulatory affairs chairman of the National Automobile Dealers Association.
Lutz said many American consumers are stretched too thin to afford new vehicles.
"Technology isn't what drives the auto industry, and neither is regulation," Lutz said. "What drives the auto industry is the consumer."
Lutz spoke on a panel that featured regulators from the EPA and the California Air Resources Board, as well as an executive from Tesla. Lutz inserted the voice of an auto dealer into the often contentious discussion of the role of regulation in battling climate change.
"Americans are maxed out and can barely afford the vehicles they're driving," Lutz said, noting that average vehicle prices and auto loan monthly payments are already out of reach for a growing proportion of his clients. As a direct result, he said, "customers are driving vehicles longer, buying used vehicles, or buying [less expensive] vehicles that don't meet their needs."
Lutz warned that a projected $5,000 price increase needed by automakers to meet increasing fuel economy requirements would "crush my dealership. It would crush my customers."
He dismissed arguments that lower fuel costs and operating expenses will offset higher sticker prices.
"We have a payback problem," Lutz argued. "We know from the data presented that the length of payback cycles is unrealistic" at current fuel price levels. And frankly, he added, "the prospect of paying a premium to see a payback seems too much like a dollar chasing a dime."
"There's a very real danger of pricing millions of Americans out of the new-car market," he said, adding that the result will be "a whole bunch of new, more fuel-efficient cars that don't get sold."
