General Motors Says New Fuel Requirements Will Add $6,000 To Price Of Cars
Bob Lutz, GM's vice president and product chief, told reporters this week that new federal guidelines that require 35mpg fuel efficiency by 2020 (yes, more than a decade from now) are so stringent that it will end up costing an average of $6,000 more per vehicle. "That cost will have to be passed on to consumers," he then threatened. We can't help but feel sorry for GM. After all, this whole "better fuel efficiency" topic was only brought up, what, like two or three months ago? And GM only has twelve years to find cost-effective (we'd say "innovative" but don't want to put too much pressure on such a backwards, fearful company) ways to lighten cars and improve engines.
"We probably have to take a lot of weight out of the vehicles. We will have to use some premium materials like more aluminum, more magnesium," Lutz said. "Which gets you the weight savings but drives the cost up.""GM says new fuel requirements to add $6,000 per car" [Reuters] (Photo: Getty)
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BTW, Car prices will probably increase by that much in 12 years ANYWAY.
Too bad GM, if you can't compete, you'll die. I'm sure some other company will be able to do it cheaper. I can already buy a Honda that gets real close.
They whined when they were told they had to add airbags too, yet somehow they managed to do it. What it really means is they will have to sell less SUV's which are their bread and butter.
Boohoo for GM. My Corrolla is from 2003, gets 40mpg highway, and cost $15,000.
Anyone currently getting 8mpg in their Suburban would save much more than $6,000 over the life of their car in gas.
Or you know, they could make smaller cars with the same capabilities.
They could do a lot of things, imho they don't even care about American consumers anymore they're on to China and India because 2Bil > 350 Mil.
@AnitraSmith: But who would buy them? Certainly not the environmentalists who drive around 1-2 kids in a Suburban. Because they don't make four door cars.
Didn't the car companies cry wolf in nearly the same way when we switched from leaded to unleaded gas?
They had years to invest in the appropriate R&D to improve gas mileage. Instead, they cranked out as many giant SUV's as they could and tried to figure out how to fit more cupholders in the same amount of space.
I have zero sympathy for them and think this is an idle threat. Go ahead, raise the prices. We'll just buy Toyota, Honda, or another brand that actually thought ahead.
That's really good. My $17K '02 Protege can still pull 34mpg highway, which I am still really happy with.
How many miles do you have on it?
@randotheking: It doesn't work that way. GM is already charging customer as much as they think they can get away with. They don't need excuses. In fact, they'd charge even more if they thought people wouldn't just buy a Ford, Honda, etc instead.
The price on a good or service has nothing to do with the actual cost of production, and everything to do with what competitors are charging. GM cars will only start costing $6k more if someone, somewhere out there in the entire industry can't figure out how to make it cheaper within the next 10 years. It's a pretty safe bet someone will come up with a workable idea.
Considering what fuel prices are likely to be in 2020, I think a car that actually gets 35 mpg will be worth an extra $6,000.
My 1989 Nissan Stanza got about 35 mpg for being a 4 door and driven by a kid whose foot was composed of something with the mass of a white dwarf star.
GM is so full of shit. I can't wait to tell them to take a hike when they ask for a government handout. Bastards.
@ARP: As someone said from the movie "Who Killed the Electric Car?", auto companies would make a car that ran on pig shit if they thought people would buy it.
You can't blame them for producing SUVs. They wouldn't make them if people didn't buy them. And you don't stay in business very long unless you make cars people want.
@ShortBus: If electric cars were profitable, then car companies would make them, and gas/oil companies would start making batteries. But they don't. Why don't people blame Energizer or Duracell for keeping battery prices so high?
No excuse is needed to raise prices. Prices are determined by the car buying market. If people want to buy minicars, the auto manufacturers will produce them. If people want trucks and SUV's, the same applies.
I'd say "they need more than an excuse" but the weak dollar means a lot of other companies will have to raise theirs.
@ekthesy: I think somewhere between 45 and 50k miles. Besides oil, brakes and tires, only maintenance I've needed is replace the serpentine belt @ $150.
Not to mention more of my Toyota was built in the good ol' US of A than the average "American" car. GM can suck it.
"We can't help but feel sorry for GM. After all, this whole "better fuel efficiency" was only brought up, what, like two or three months ago?" You're kidding, right? CA and other states have been trying to override the woefully lame federal standards for years. Why feel sorry for companies who not only have had the feds help them bail out for years, but have heaped years of ugly, low-function merch upon us??
@ARP: The big three have cried wolf at EVERY major change in safety, environmental, or fuel economy standards. They've cried and cried about how it was going to put them out of business and how IT CAN'T BE DONE!
While Honda goes quiet for a while and then is all like "hey guys, we did it, what do you think?"
That's the pattern since the 1970s.
It cost you 150 to replace a serpentine belt? Shouldn't that take like 5 minutes and a 10 dollar breaker bar? I know it did on my T-bird.
Or does stuff actually have to come off of your car to do that?
Wait, isn't this the same company that runs all of those "We're building super-efficient cars for the future" TV ads?
At the rate of inflation we're about to be looking at, 12 years from now, $6,000 will be the price of a six-pack of beer.
Oh well, GM, we'll miss you!
@Geekybiker: that's what I was thinking, too. Maybe they'll have to go figure out how to make a good station wagon fleet for the modern age.
Then, when I'm stuck behind a morning school caravan, I might actually be able to see what color the light is!
Techno: It's not that easy on most Japanese cars. My Subaru was more than that. Best way to do it is while you're changing a water pump or something that requires you to take the front end of the engine apart.
@ClayS: 'No excuse is needed to raise prices. Prices are determined by the car buying market. If people want to buy minicars, the auto manufacturers will produce them. If people want trucks and SUV's, the same applies.'
What about the fact that the organizations making and selling those huge vehicles are *also* the ones making people want to buy them? American car companies constantly advertise their trucks and SUVs. Dealers always push the most expensive vehicles with the biggest markups. I'd be willing to bet that if we saw a serious shift in advertising and sales focus, a shift in car sales would follow.
Prices are determined by the market, but the market is determined in at least a significant part by advertising and sales practices.
@youbastid: *Assembled* in the USA isn't the same things as *made* in the USA. Domestic auto makers contribute significantly more to the US economy than foreign makers via the trickle-down effect--even if your Toyota is bolted together in Kentucky.
@ShortBus: "They only made it because people want it!" is the rallying cry of the fast food industry too. And it's true, but only to a certain effect. The only reason people WANT SUVs in the first place is because of the image of SUVs. Auto manufacturers have poured so much of their ad dollars into their SUVs, tapping into the American belief that bigger is ALWAYS better. The fast food companies have done the same. People didn't ask for these things, but companies know that when you show someone two pictures of two products, one bigger than the other, but both costing the same, they will always go with the bigger one. So what do you do? Make everything bigger than your competitor.
@TechnoDestructo: It should cost $10, but I had no idea what things cost and I let the dealer do it. What can I say, I was younger.
@ShortBus: Are you seriously trying to tell me that the trickle-down effect works? Did you time-travel here from 1988?
I'm looking at some of these comments and cannot believe the stupidity behind some of them...
You're whining more than Bob Lutz.
Remember it was you the consumer who demanded the SUVs be made not GM or Ford or Toyota or anyone. Can anyone here tell me what auto companies were involved in the cafe lawsuit? I bet none of you high and mighty types will have the answer. You will justs it in your chairs and cry foul at any american auto maker. Well guess what. Toyota was at the front lines during that law suit.
The ignorance is astounding. You're all sheep and should be treated as such. When you're ready to have a competent discussion. I'll be here.
@ShortBus:
How do trickle-down economics work while CEOs are getting multimillion dollar bonuses and golden parachutes? Seriously, I prefer a car assembled in the USA, employing hundreds or thousands of Americans in factories, to a car assembled in Mexico, where American workers see almost none of the money from its manufacture or sale, relatively.
@coaster.n3rd: Because they can (lobbyists), and because they can claim to (further) economically devastate parts of the country when they have to close factories. THEY should be responsible for the jobs retraining when they do so, but that's yet another responsibility they leave for the states in question/feds.
@coaster.n3rd:
See my previous comment re: the market being determined by advertising.
Think it's not true? Read some articles about the amount of money drug companies spend in advertising vs. the amount they spend in R&D. I'd like to see the breakdowns of figures like that for the car companies.
I feel for GM. I also fear that these new regulations and standards are going to wussify cars like the corvette, mustang and other sports cars. Those are supposed to fast and powerful. What they do with gas is secondary and most people don't care about it. Hopefully those regulations allow loopholes for limited number of the prized gas guzzler cars to continue to be produce...unless they can actually make them gas efficient
Toyota makes plenty of suvs too people
Sequoia
Rav 4
4 Runner
FJ Cruiser
Highlander
Land Cruiser
Tundra
Tacoma
@coaster.n3rd: Toyota was thrown in there because they sued every major car maker. They considered every car to be a contributor to pollution, therefore every auto manufacturer had to be considered.
@strum40: I didn't mean to insinuate that since my Toyota gets 40mpg, then all Toyotas are great. I was using my car as an example that cars that get high gas mileage don't have to be expensive as GM insists they do.
Another way to look at it would be: Assuming there's much left, what will a gallon of gas cost in 2020? If it's $12/gallon, an extra $6,000 invested in fuel efficiency (amortized over the life of the car, mind you) would be a bargain.
Of course, it's also interesting to examine the assumptions behind Bob Lutz's statement. It's going to be expensive for GM to meet the new standards because, presumably, they will still be including gas-guzzling monster trucks like the Hummer H2, GMC Denali, and Cadillac Escalade in their fleet averages. Well yeah, if you don't want the Escalade dragging down your numbers you would have to make it out of titanium, carbon fiber, hugs, and rainbows. As an alternative, I would suggest that GM stop making 3+ ton passenger vehicles.
CAFE rules are just dumb. They don't take into account the fact that it's total gas consumption that matters, not consumption per mile. A 10mpg Hummer driven 8k miles/year is much less of a problem than a 40mpg Prius driven 50k miles/year.
If we want to really cut gas consumption, we need to raise gas taxes. That will create consumer demand for higher fuel economy vehicles, and reduce the # of miles driven. Instead of CAFE standards for 2020, let's raise the federal gas tax $0.50/gal per year every year through 2020. I guarantee, the average economy of cars sold in the US will be way above 35mpg by then.
Bob Lutz is smokin' crack! Honda does it and so does Toyota. I just don't get it. GM remains stupid and nonsensical. Nonsensical in what Bob said and stupid that they believe their own bullshiite.
GM you are no closer to reviving your brand than Woolworth's.
@coaster.n3rd: Who cares who invented. They whined when they were mandated by law in all cars. "They'll cost too much" they said. The tech was around for years and years before then. It wasn't a matter of being able to do it. It was an issue of cost. Same here.
@bravo369: Aren't the new fuel standards on a fleet-wide basis? Such that muscle cars and beasts would still be allowed, as long as they're offset by adequate high-efficiency models. I could be wrong.
@NightSteel, et al:
I happen to know a bit about the trickle down affects of the auto makers, yes. As I type this, I'm looking out a 16th floor window overlooking downtown Detroit.
The Big 3 indirectly employ a vast, vast number of people in the US--esp. in the Midwest. I myself am a computer person. I used to do a lot of work for commerical insurance companies. These insurance companies' largest clients were industrial engineers, architects, and the like. These professionals biggest clients were suppliers to the Big 3 (the people who made the bolts, car seats, etc that are sold to GM, Ford, and Chrysler). There is a massive amount of trickle down in the auto industry. And there is considerably more trickle down from the domestic manufacturers than the oversees ones.
I don't like a lot of things about domestic auto manufacturers, esp. the unions. But they are much more important to the US economy than most people--certainly those outside of the Midwest--really understand. There are valid reasons to buy foreign, but the fact that some foreign cars are assembled in the US isn't one of them; it's simply a red herring.
Horse shit. That is an excuse to raise prices.