CAFE Standards

It's sorta common knowledge that our President, a native of urban Chicago, is not a fan of the SUV.

One prominent auto magazine had this take on his mandate to massively increase the fuel economy of the American motor fleet.

Obama's CAFE Fuel Economy Standards to Create Fleet of Tiny, Expensive Vehicles - Car News

But we "know" "everyone loves the environment" and "everyone hates SUVs". So the car buying public is reacting positively to how the auto industry is being changed?

Maybe not..

If you've got your eye on a new SUV, don't blink.

It might be gone. Even with the auto industry mired in depression – sales are down nationally 36.5 percent – big vehicles such as the Ford Expedition and Chevy Tahoe are in tight supply because of drastic production cuts that automakers imposed last year as sales began to plummet.

Now, a year after $4-a-gallon gas nearly killed SUVs, some dealers in this market are selling them for window-sticker prices. Moreover, most late-model used pickups and SUVs have regained all of the thousands of dollars in trade-in value they lost last summer, dealers say.

O.K. , this is Texas, the biggest , reddest and right now most prosperous part of the country. But don't think this is likely to be an aberration. And it is going to be a big problem in trying to recover much of our $100 Billion or so investment in Detroit.

The competitors to GM and Chrysler have to follow CAFE too, but are under less intense pressure to be "green". Look for Ford and Toyota to maximise production of Explorers and Highlanders if GM and Chrysler are pressured to hold down production. And look for SUV prices and profits to rise further due to regulatory scarcity.

One huge problem Obama Motors has is the market share for domestic brands are disproportionately based in Red States, in rural/exurban areas, and among older and non college educated drivers.  Yep, people who mostly voted for John McCain. 

The Obama brain trust will force the two government owned car manufacturers to develop a product line that appeals to young urban sophisticates. ---not the traditional market of "apple pie and Chevrolet". Few of these folks are going to be pried loose from buying foreign brand automobiles. They've just become too accustomed to doing this.   Sounds like Ford is going to gain lots of market share as the last "real American car company" if it can avoid running out of cash.  

I'm certainly not arguing that the previous management of Detroit were a bunch of wise men. But Detroit made SUV's because they were profitable. The Chevy Volt will not be. So the new crew running the car business might lose even more money than the old crew did.

And make the SUV back into a huge status symbol due to its scarcity. 

Number of American Combat Deaths in Iraq, CUMULATIVE, 2003-2009: 3,443.  (Click on casualty report .pdf on the left-hand column of the linked page.)

Number of ANNUAL American Deaths due to CAFE Standards: 3,900.

3,900x6 = 23,400; 23,400-3,443=19,957

=> CAFE standards have killed approximately 20,000 more Americans over the past six years.

Al Gore, you must be soooooooooooooo proud!

(h/t Rush)

Cahnman out.