New rules and regulations by the federal government that required automakers to improve fuel economy and safety of vehicles will have the effect of pricing low income buyers out of the market.
A study by the National Automobile Dealers Association predicts up to seven million potential buyers will be kept out of the new car market by increases in CAFE standards alone. While the Dept. of Transportation predicts accelerated fuel economy standards will add $2,000 to the average price of new vehicles, NADA believes that figure to be $3,000.
In addition to proposed CAFE rules mandating 54.5 mpg for cars and trucks by 2025, federal regulators want all new cars to be equipped with backup cameras and other high tech gadgets to increase vehicle safety. The latest suggestion is that all new cars be equipped with redundant braking systems to prevent unintended acceleration stemming from suspected problem of stuck gas peddles on Toyota Camrys.
The pace of regulations shows no sign of slowing. Environment and safety watchdogs continue to ask Congress and government regulators to be more involved. The federal government and automakers are currently conducting tests on the “intelligent” car of the future.
To compound the problem for low-income buyers, the federal government program, “Cash for Clunkers,” caused a spike in used vehicle prices. This price spike has yet to abate. The ‘car park’ – the number of cars on American roads – continues to shrink adding additional pressure on prices. In the next decade, there could be little relief for car buyers.