The CAFE rule, which governs model year 2011 autos, was based on the "best internally consistent information available," according to the National Highway Traffic Safety Administration. The agency will update the forecasts in future rulemakings and said the follow-on rulemaking for model years 2012 and beyond will be set only after a host of new information and methodology is considered, things it said were not possible to consider for the 2011 rule because of the requirement that the standard be set 18 months before the vehicles affected by it are due in dealer showrooms.
The rule says that it is "reasonable to anticipate" that the new analyses may lead to changes and that ongoing review will include many new concerns, including both the "financial health of the industry" and the nation's "energy and climate change needs."
Both the White House and Congress have made it a priority to boost sales, largely as a way to boost revenues at Detroit's Big Three to help the carmakers stay afloat and prevent the failure of one from dragging down the industry's vast network of suppliers.
In the $787 billion stimulus package, lawmakers provided tax breaks for the purchase of new cars and trucks – allowing consumers to deduct sales and excise taxes from their purchases – and provided additional incentives for the purchase of plug-in hybrid and electric autos.
Obama also has requested that lawmakers review the stimulus to find federal cash to fund a scrappage plan – often called a "cash for clunkers" program – that would allow consumers to trade in an old, gas-guzzling car for a new, more fuel-efficient one. It is a move supporters say will boost auto sales while speeding up the market penetration of advanced, fuel-saving technology.
"In the short term, the incentives that are currently in place will do very little to prop up auto sales," CSM's Barker said. "But what is currently under consideration, a national scrappage program, is something that we think will have an immediate impact on auto sales."
The modernization programs have been used in a handful of European nations to bolster sagging new car sales. In Germany, February sales jumped by more than 20 percent after the country offered car buyers roughly $3,000 in rebates.
The concept behind the program was considered by lawmakers last summer during the run-up in fuel prices that left Congress searching for ways to boost domestic energy production while curbing fuel consumption. The programs again received attention late last year as the new car sales slide continued and lawmakers looked for ways to entice Americans to buy more cars to help prop up the ailing industry.
The value of the vouchers would range from $2,500 to $5,000, depending on the specific program and the model years of the trade-in and replacement vehicles.
Ford Motor Co. has estimated that such a scrappage program could result in an additional 500,000 cars and trucks being sold in 2009, while GM has predicted the bill could generate as many as 2 million additional units.
Other analysts have taken a more conservative approach.
IHS Global Insight predicted sales rates will remain stagnant at roughly 9.5 million for the rest of the year. Its analysts wrote in a note to investors that while they had considered the impact of new federal incentives such as the scrappage program, they were "giving more weight to the ongoing economic recession and the still-oppressive effects of dismally low consumer confidence levels on new car sales this year."
Reprinted from Greenwire with permission from Environment & Energy Publishing, LLC. www.eenews.net, 202-628-6500