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Home » Biofuels Engine Design, Business News/Analysis, Environmental Protection Agency, Federal Agency, Federal Regulation, Infrastructure, Opinions, Policy, R & D Focus, Vehicle/Engine

Fuel Economy Is Going up. Vehicle Prices Are Holding Steady.

Submitted by on November 30, 2017 – 4:58 pmNo Comment

by Eric Junga (American Council for an Energy Efficient Economy) In responding to an Environmental Protection Agency (EPA) action on vehicle standards, ACEEE found that average vehicle prices have remained essentially flat over the past 15 years, even as average fuel economy improves. The finding rebuts multiple claims from the auto industry that boosting vehicle fuel economy makes cars and trucks unaffordable for American consumers. Our analysis is once again relevant as federal agencies, acting on the Trump administration’s decision to review fuel economy standards, have resumed evaluating the appropriateness and feasibility of existing regulations and greenhouse gas emission requirements of cars and light trucks. Our finding complements the agencies’ 2016 technical report, which found that savings at the pump from better fuel economy would far offset the cost of the technologies needed to meet the standards. Bottom line: Consumers are saving money, and affordable vehicle choices remain.

The average price paid for new vehicles reflects many factors, but consumer preference for better-equipped vehicles and longer loan terms that decrease monthly payments are two of the primary drivers. The price dip during the recession reflects fewer sales of expensive cars and trucks in favor of more modest vehicles. The effect on average prices of 2009’s federal “Cash for Clunkers” rebate program is also apparent, where average expenditure dropped with the generous rebate. More recently, consumers are buying more trucks instead of cars, and trucks are typically more expensive than cars[M1] . If Americans had continued to buy the same mix of cars and trucks as they did in 2009, the average vehicle purchase price of the entire light-duty fleet (represented by the orange [EJ2] line) would have been roughly $1,900 lower during the first months of 2017 than it was. In fact, average vehicle price could have been at its lowest point, outside of the recession, since BEA began tracking truck prices in 2002.

For cars alone, prices have been on a downward trajectory since 1998, well before the recession or the increase in fuel economy requirements.

The figure below shows that, in real dollars, the average price for a car “out the door” (what people actually pay, including rebates and fees) is 16% lower today than in the early 1990s. READ MORE

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