Upside down after 150,000 miles.
The argument of fuel-economy savings versus the inflated up-front cost of the new vehicles is fantasy, but the retorts bear often repetition in the face of a government attempting to slam down the consumers’ throats what type of vehicle is “good for them.” Here’s a letter in the WSJ responding to Sec. LaHood’s utopian predictions:
Transportation Secretary Ray LaHood’s May 29 letter is wrong on many issues, including safety, but his fiscal numbers are way off base. A report submitted to the National Highway Traffic Safety Administration in June 2008 by Sierra Research demonstrates Mr. LaHood’s folly. The average cost per vehicle to meet the new standards (35 miles per gallon combined for cars and trucks) will be a minimum of $3,778 per vehicle. For light trucks that number balloons to $5,877, not the $600 Mr. LaHood says. And the fuel economy number on the window sticker will not average 35 mpg, it will be 20% lower after it is adjusted by the EPA.
But, for the sake of argument, if your mileage went from 30 mpg to 40 mpg your savings will not be $2,800. The savings is 125 gallons of gasoline at 15,000 miles a year or about $300 at $2.50 a gallon. The interest cost on the extra $3,778 at 6% will be about $225 a year. So the real savings will be about $75 a year, and the $3,778 will never be recovered. After 150,000 miles of driving you will still be upside down by $3,000. For trucks and SUVs it will be worse. Most European manufacturers will be better off paying the one-time fine of $60 per mpg per vehicle for each mpg the vehicle is under the standard. It will be a lot cheaper for the manufacturer and for the consumer, who will also be buying a much better vehicle in terms of performance, utility, safety, comfort, handling and ride quality. There will be a “jalopy effect” as a result of these ridiculous regulations. Need more proof? When has the government ever saved money or been efficient? The marketplace always is.