Thanks for new fuel economy standards, that is.
That’s what the National Automobile Dealers Association claims. And it will continue to rise when the Obama administration’s new fuel economy regulations come into affect, possibly pricing consumers out of the market.
The price of used cars will increase by 1.8 percent by April, the NADA predicts, continuing a trend that saw used car prices increasing by 3 percent in 2011. Thanks to increasing demand and people holding onto their old junkers for longer, there’s a less ample supply of used cars. And the cost of smaller, fuel-efficient cars will increase by around 2.7 percent.
You’ll remember that the NADA is one of the major trade groups that opposes the proposed Corporate Average Fuel Economy of 54.5 mpg average by 2025, that is being pushed by the federal government. These leaps in fuel efficiency will drive up the cost of new cars, which will push cash-strapped consumers towards used cars—thereby drying up the supply of used cars even more, and increasing prices across the board.
“If government policy is going to shrink our customer base, shouldn’t we be concerned?” said Bill Underriner, NADA chairman. “NADA is concerned. NADA is fighting this fight because we want the days of empty showrooms to be long gone.”
Underriner would like to make it clear that he supports fuel economy gains, presumably because saying otherwise in these times places one’s social status somewhere between Charles Manson and a Japanese whaling crew. But Underriner is looking for a fair debate, primarily because he’s concerned about an estimate from the Environmental Protection Agency estimate that to meet the new fuel goals, carmakers would have to add $3,000 to the cost of every car. And if the average cost of a car increases by $12,000 to $15,000 by 2050—thanks to the above estimate, as well as inflation—as many as 7.5 million Americans will have to take the bus.
Just 10 years ago the average cost of a domestic car was $18,897. Today, that same 2002 Chevy Malibu is probably worth $500 Or Best Offer. But the rising trend of car prices, new or used, means that nobody is safe from emptying the contents of their wallets.