CAFE Kills (GM)
By David Henderson
General Motors does produce competitive cars and trucks, but not one of them is small. Consumer Reports recommends three GM cars and three GM trucks. The recommended cars are the Chevy Malibu (the unrecommended hybrid has been dropped), the large Buick Lucerne and the Cadillac DTS. Consumer Reports recommends the Chevy Avalanche and Silverado and the GMC Sierra trucks. Car enthusiast magazines insist on adding Camaro, Corvette and the 556-horsepower Cadillac CTS-V to that list.
Among those nine best GM vehicles, only the four-cylinder Malibu achieved as much as 25 mpg in Consumer Reports testing. The others get 12-17 mpg, yet they are no less fuel-efficient than comparable foreign brands. The Environmental Protection Agency rates the mileage of the Toyota Sienna van and Nissan Titan pickup as worst in their class, and comparable Chevys as best. Unlike GM, however, Japanese car companies sell enough small cars to offset the large and thus hold down the average figures.
This is from Thursday’s Wall Street Journal. Alan Reynolds points out that CAFE is killing General Motors.
His basic argument is that firms specialize and that GM is the one major auto/truck company that specializes in heavier, bigger cars and trucks.
Keeping CAFE won’t prevent us from buying the cars and trucks we want. We’ll just buy them from firms other than GM. Reynolds writes:
Americans will still buy Jaguars, but from an Indian firm, Tata, rather than Ford. They’ll buy Hummers, but from a Chinese firm, Tengzhong, rather than GM.
Reynolds proposes replacing CAFE with a fuel tax that is uniform across various fuels. He points out that it would “remove an irrational tax penalty on buying diesel-powered cars — arguably the most cost-effective way to improve mileage without reducing car size or performance.” I agree that the federal tax should be uniform–at zero.
During Michael Dukakis’s campaign for president in 1988, his economic advisor Larry Summers advocated ending CAFE. Too bad Summers has no power in the current administration.