US Gas Prices, CAFE Standards, and the Gas Tax

[steve]

in England...
http://www.ford.co.uk/ns7/all_cars/-/-/-/-/-/-

Take a look at the prices and double them (for the dollar/pound exchange rate). So the base price of the Ford Focus (the new, very popular European model) is 50% higher than it's American counterpart...and this new model is not sold in the U.S. Nor will the new, popular European model be sold in the US in '08 (the old one has been "re-skinned" again for the US market).

Why?

Because it would not be profitable to sell here. Gas is still cheap enough that most are not willing to buy the new, better Ford Focus for $26K, even though it gets 30 to 40 MPG.

Even a Prius - which is around $26...for a lot of folks, even with gas prices at $3/gallon, that is too expensive to justify for "such a small car" and the minute savings on fuel. Not everyone, but the vast majority. Thus, hybrids are still novelty cars - because to sell them profitably, companies have to charge more.

The problem is that, contrary to what the consumer would think, it costs about the same for a car company to produce a small car as it does a large car. Slightly less steel, but so much of the cost is R&D, marketing, assembly line stuff...things that cost the same no matter how large the undercarriage box frame is.

Because of this assumption that "small" = "cheap", we've come up with the CAFE stanards (minimum govt required MPG regulations.

And because WE, the consumer, don't buy small cars, what Ford and GM have done here is make a bunch of Ford Focuses and Dodge Neons on the cheap, sell them to rental car companies to meet govt regulations.

Now that gas prices are STARTING to edge up, folks are talking about raising the CAFE standards...but at the same time instituting higher CAFE standards.

As a card-carrying liberal who DETESTS the oil industry and its Iraq War, I have to stand up and say this is the WRONG idea.

Are we willing to pay almost 30 grand (new, of course) for a small (aka: "economy") car if gas is $3 a gallon???

But, how about if it was $7???

Because, without changing our habits one iota...if we all just bought smaller cars (for 90% of consumers, it's a true option - not that many folks live on farms...who actually need big trucks)...not even hybrids, just Ford Focus or Corolla like fuel milage of near 40 MPG...(and maybe drive a little less) we could almost cut out oil dependence IN HALF.

Chaning CAFE standards won't convince the consumer, the ultimate cause of our mess, to change our gluttonous habits. It will merely create a law where the car companies have to make a bunch of shitty cars we won't buy to raise their fleet average.

I include myself in that statement.

[FORD]

I notice they sell Ranger pickups there with diesel engines over there. To my knowledge, you gotta go all the way up to the mammoth "super duty" monster trucks to get a diesel engine Ford truck here.

Biodiesel trucks would be a reasonable alternative for those of us who will probably never fit in a Focus or Prius.

[WACF]

Europe is way ahead of us in the diesel department.

[hideyoursheep]

I've noticed the law enforcement vehicles are getting smaller, opting for the 6 cylinders Chevy Impala and Ford Taurus..Some are going with the new Dodge Charger R/T under the notion that the cylinders can be shut down to 4 instead of 8 to save fuel.(yeah right, they're gonna be wide open all the time)BTW- didn't Caddillac try this a few years ago with one of their models and it didn't work?

Mass transit could do wonders for all of us in the US. Owning a vehicle isn't as much a need there as it is here, and it's no secret to auto makers or oil companies.

Anyway compacts should never cost 26k, unless you option it out with everything possible, even then it's questionable.

[steve]

Originally posted by hideyoursheep

Anyway compacts should never cost 26k, unless you option it out with everything possible, even then it's questionable.

And I think this explains exactly why rasing the CAFE standards hasn't worked and won't work.

I own a Mazda Protege - bought it for around 16K new including taxes, delivery, etc. Relatively cheap for a new car when I bought it 4 years ago.

However, how much profit did Mazda/Ford make off me??

1 or 2 thousand?? But that is a slim profit margin to aim for - considering some cars are busts (marketing wise).

Not really enough profit to sustain a car company. If they were selling to a bunch of consumers like me, they'd go out of buisness.

Whereas, a Ford Explorer - which might cost only a little bit more to produce than a Focus/Protege (same platform) they might sell for almost 30K brand new - so for those cars, they might be making almost 15K profit.

And frankly, the same goes for Toyota. They have a marketing coup in the Prius, but really, most of their US profit is made on Sequioas, Tundras, and the bigger cars in their fleet - they are really not that much different in GM and Ford in this respect. They are doing better in this country because they have good reliability reputations and great marketing.

CNN just had a special called "We're out of Gas", and it chronicled Brazil - which is energy independent via its sugar cane ethanol. The seller producer of flex fuel cars there is GM.

[FORD]

The even bigger racket with SUV's - especially the big ones- Hummers, Expeditions, etc. is that a tax loophole lets idiots write them off taxes as "farm equipment" on basis of their weight alone. Meazning Ford or GM make their profits, the oil companies make their profits, and the idiots driving them get a ridiculous tax cut. Another incestuous relationship brought to you by the BCE.

[steve]

Originally posted by FORD
The even bigger racket with SUV's - especially the big ones- Hummers, Expeditions, etc. is that a tax loophole lets idiots write them off taxes as "farm equipment" on basis of their weight alone. Meazning Ford or GM make their profits, the oil companies make their profits, and the idiots driving them get a ridiculous tax cut. Another incestuous relationship brought to you by the BCE.

While I agree there shouldn't be a tax loophole for gigantic vehicles like that, it is mainly the fact that our gas is not taxed like it is in Europe that folks can afford to buy those things.

GM and Ford excutives have been quoted as saying that a Federal Gas tax comparable to European countries would actually help them in this country - then they'd be able to take the hot selling fuel efficient popular cars they sell in Europe (Focus and the Opel (GM) Vectra along with the VW Gulf are the top 3 selling cars in Europe) and sell them here profitably.

There is the whole argument that a gas tax as such would be regressive and unfairly penalize the poor and middle class, but unless we all use less oil, the poor and middle class will be the ones dying in the continuing Oil Wars (Iraq being Oil War I)...so the tax is regressive whether it's at the pump, or income taxes supporting the Oil Wars, or funeral costs for a dead son or daughter.

[hideyoursheep]

Originally posted by steve
And I think this explains exactly why rasing the CAFE standards hasn't worked and won't work.

Well it didn't work in the 70's because Detroit wasn't prepared for it.

Today, there are so many auto makers working together and owned in groups it's a lie to say they couldn't do it now.

So many auto makers have the same standards and parts suppliers it's hard to pick one that stands out other than GM- the rush to move to cheaper labor in Mexico is finally biting them in the ass. The quality of their product has taken such a hit, other component mfgr's will not consider giving GM a contract for certain components because they're too cheap, and they don't know if they'll be around the next fiscal year to do buisness again.So it's off to the flea market for them-and it's sad, I used to be a Chevy guy. If you still work for GM, sorry. And Buenos Dias!

Gone are the days when the entire car was made in the US,or Canada, or even Japan...chances are those Toyota's are US made now, with most of GM in Mexeeekooo.

BTW, Ford won the title for most reliable vehicle for 06, with Toyota, Chrysler and Nissan close behind.

[scamper]

Do the poor and middle class buy new cars?

[hideyoursheep]

Originally posted by scamper
Do the poor and middle class buy new cars?

NO!!

Banks do. The middle class's best friend.

Watch the SUV market tank and the used ones go cheap to the one demographic that gets hit the hardest by rising fuel prices.

It's a vicious circle, but it's true.

I wonder....

Can I claim my Crown Vic as a tax break?

I can carry 2 bales of straw and it's a pretty heavy ride....

When's the last time you seen a Hummer carrying anything but a stereo, rims, or a driver?