Government Rules Could Hurt Price Conscience Buyers

- April 17, 2012

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.



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