Possible Effects of the Latest CAFE Proposal on Prices of New Cars


The US government has previously proposed a new target for the Corporate Average Fuel Economy or popularly known as the CAFE. The latest target of the CAFE was actually announced during the month of August last year and this is 54.5 miles per gallon by 2025. As soon as this target is approved, all of the carmakers will be obliged to comply.

Although almost all of the car makers that operate in the US have declared that they are willing to comply with this, a lot of car experts are still getting worried with the possible effects of this policy on the prices of new cars. These experts are getting worried since the need to cope with the CAFE target by 2025 will surely affect the prices of new cars. In order to adhere to the latest target, the carmakers will most likely use the most sophisticated vehicle components and this could automatically increase the prices of every car model in the market since the production cost will surely go up.

The National Automobile Dealers Association or NADA also shares the same sentiments. In fact, NADA agreed that all of the car makers will not hesitate to increase the amount that they are spending for their vehicle production so that they would be able to adhere to the implemented CAFE target. However, these companies would absolutely do everything that they could do to earn the expenses that they have incurred in the production and this could possibly lead to a substantial increase in price. This statement is currently considered by most buyers to be significant since NADA is very much involved in vehicle sales and they represent a total of 16,000 dealerships and about 32,500 franchises all over the US.

In addition to this, NADA has conducted a study about this particular issue and the results revealed that the prices of the cars will most likely increase by $5,000 by 2025 or more. The results also suggest that the government estimates where the latest CAFE target was based were too low and this could eventually create a very harsh effect on the US automobile industry’s functioning in the near future.

About Marty Bay

Marty Bay is the Lead Writer and Editor for VPM Automotive. He has researched and reviewed 100s of cars, and writes extensively about car technologies.
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