01.28.2008
Last week, Bob Lutz, vice-chairman of General Motors, gave a speech to the Automotive News World Congress in Detroit in which he said that Americans were not going to start liking small cars until the price of gasoline went up. Way up, that is, like to close to European levels, which average around $8 a gallon for regular unleaded as I type this. Lutz’s point was that most American consumers have to want to buy a smaller, more fuel-efficient vehicle because it makes economic sense for them to do so, as opposed to expecting most American consumers to someday want to buy a small, fuel-efficient vehicle out of political or environmental concern.
Quoting from Automotive News (paid subscription required), the host of the World Congress event, Lutz said the following (Automotive News text in italics):
” If for the last 15 years we’d had a slow but sure rise in federal fuel taxation of, say, 15 cents a gallon per year — that would have gradually put the customer in the equation,” he said.
Over time and without any federal fuel economy regulation, the markets could have naturally and gradually transitioned Americans into smaller and more diesel-oriented vehicles, Lutz said.
” I’m not advocating tax hikes or calling for higher fuel prices, I’m just explaining the difference between the European fleet and our own,” he said. ” In America, instead of raising fuel prices, we’ll end up having to raise new vehicle prices, because of the increased use of lightweight materials and fuel-saving technology.”
That will cause more people to hang on to the vehicles they have longer, slowing down new sales growth, ” which is exactly counter to the intended effect,” Lutz said.
” Europeans, at their fuel prices, are willing to pay premium prices for premium small cars that deliver terrific fuel economy. That is not the case here in America, land of the big truck and big horse” and, he added, ” the big American.”
” It’s just common sense,” Lutz said. ” You don’t roll over the whole fleet at once. It takes decades — and the bigger the price disparity between the old ones and the new ones, the longer it takes.”
Well, he’s right, of course, except for the part about E-85, which I think is at least a time-wasting cul-de-sac, if not a dead-end solution. But he’s right about everything else, but it really doesn’t matter if he’s right or not, because politicians make the laws, including the CAFE regulations and one thing that politicians are NOT going to do is raise the federal gasoline tax. It’s a lot easier to push off responsibility for encouraging Americans to use less gasoline on to the vehicle manufacturers.
But they know, and just about anyone else that that gives the matter any kind of thought knows, that Americans will stop using less gasoline when gasoline is expensive for a few years in a row. As an example, I guarantee that 36 consecutive months of $5 a gallon gasoline would have Americans embracing smaller cars in a hurry.
But instead we have the bad theatre that is CAFE. It is a joke, but the joke is on us, the American public, because CAFE is not going to be anything close to a solution to our oil addiction vis-à-vis the vehicles we drive.
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