New Fuel Economy Standard may scare Consumers
by EVANDER KLUM
Toyota Motor Corp. recently joined the big three American automakers in Detroit in their campaign to oppose a new standard passed in the congress for fuel economy. As the only Japanese automaker to join the three, Toyota faced torments from several environmental groups who are the proponents and supporters of the Corporate Average Fuel Economy (CAFE) standard of 35 mpg by 2020. The major controversy here is that automakers can achieve the target; they just need more money and time.
One of the major concerns of the car manufacturers is that, with the bill, all pickups and sport utility vehicles that they will release in the market should have fuel economy of 27.6 mpg. Although automakers are complaining, the American congress and even these companies know that this goal is reachable. The goal entails the automakers to raise sufficient budget for the campaign only through raising the tag prices of the vehicles which will eventually cause additional burden for the automaker and the consumers as well.
Presently, automakers already have the technology to make the large vehicles greener. The hard thing is it will require the automakers billions of dollars for an average pick-up or SUV to gain 10 miles per gallon more than they normally do. Not including Toyota, the big three of Detroit including General Motors, Chrysler LLC and Ford Motor Co. (sells Volvo exhaust) is not in financial health to make such big investment. Profitability is hard these days for the big three American Automakers. A research conducted by Global Insight revealed that it would require $12 billion for technology and manufacturing investments that includes $8 billion for eight new diesel plants. According to Global Insight��s director of automotive consulting, Phil Gott, the automakers have to start making the investments now for them to achieve the ramp-up with consumers.
Until now, the American government has not announced any plans of subsidizing the change. Government officials see hybrid technology as the key for the ��hundred miles per gallon�� goal. Hybrid vehicles can run an average of 40 mile not using gasoline as it use an electrically powered battery as an alternative source of power.
Toyota already made huge investments in its new pick-up plant in San Antonio and in Indiana to build SUVs. If the new energy bill is approved, the company will not get its planned return from the investment it made in the plants and other engine plants. Toyota with the American automakers supports another bill passed in the congress with a goal of 32 to 35 mpg by the year 2022. There is not much difference than the other bill, but this bill reduces size and speed of the investments that the automakers ought to make. "We believe this legislation sets a realistic and achievable deadline for all automakers to increase fuel economy standards," said Josephine Cooper, Toyota's U.S. head of government affairs.
Truck and SUV buyers look closer to upfront costs than the car��s ongoing cost. The average consumers will have to pay additional 25 to 30 percent for their vehicles; it is something that will definitely uphold a buyer. For example, a Chevrolet Silverado 1500 costs $26,000 to meet the fuel economy standard; the truck will be priced at $34,000. However, as fuel efficient as it is, the truck may spare his owner more than $1,000 per year on fuel cost. The automakers are worried that the upfront or the price tag of the vehicles may scare their buyers.
