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Will CAFE Kill Porsche Sales In The United States?

Posted in Newsworthy, Porsche by Kurt Ernst | February 23rd, 2010 | 2 Responses |

2010 Porsche 911 GT3; endangered species?

CAFE, or Corporate Average Fuel Economy, is a government-set standard that requires automakers to meet certain fuel economy ratings across their fleet. Take Chevy, for example: the fuel economy of the ZR1 Corvette (16 mpg combined) is offset by the fuel economy of the Aveo (30 mpg combined). Calculation is based on harmonic mean, not arithmetic mean and involves a rather complex equation factoring in vehicle type, fuel economy and units produced. Under the current standard, adopted in 2007, manufacturers must achieve a CAFE rating of 27.5 for passenger cars and 23.5 for light trucks.

In May of 2009, Barack Obama proposed a new national fuel economy standard. The bill is set to be signed into law in May of 2010, and will go into effect with the 2012 model year. By 2016, the new standard will be roughly 39 mpg for passenger cars and 30 mpg for light trucks.

Porsche, because of product mix, will need to achieve a CAFE of 41.4 mpg by the 2016 model year. Given that their current CAFE is 27 mpg, an increase of 14.4 mpg across the product line in six years is all but impossible. Under the terms of the new proposed CAFE regulations, Porsche could continue to sell vehicles in the US as long as they were willing to pay a fine on each vehicle sold. This has been standard practice for years with manufacturers such as Mercedes, Porsche, Ferrari and Lamborghini. The problem? Under the terms of the new standard, the fine per vehicle increases from a few hundred dollars to $37,500 per car. No, that’s not a misprint; Porsche would need to pay the government $37,500 for each unit sold in the US after 2016.

The new standard also incorporates wheel base and track width numbers, and heavily favor domestic manufacturers. Foreign brands with a diverse product mix (such as VW or Audi) will fare better, but still have reason to be concerned. A sales volume increase in Volkswagen’s Toureg or Audi’s Q7 may drive their CAFE requirements beyond what is achievable, forcing them from the U.S. market as well.

The bill isn’t signed into law yet, and a lot can happen in six years. Still, the thought of losing iconic brands like Porsche to government regulations doesn’t sit well with me. If you’re a car guy, it shouldn’t sit well with you either.

Source: The Truth About Cars

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2 Responses

  1. Vernon says:

    Fuel standards across their fleet, how does that work? I mean, under the GM banner there are several brands (Buick, Chevy, GMC, and Cadillac). Do they go by brands or by company? As a company it seems as if several companies as a whole would come dangerously close to failing due to trucks being a part of their lineups. Wouldn’t Porsche being a part of the VW company be safe?

  2. Kurt says:

    I believe it’s done by brand and not by parent. VW’s ownership stake of Porsche won’t have any influence on their CAFE requirements.

    I used Porsche as an example, but there are quite a few manufacturers that need to be concerned. What about Ferrari? Lamborghini? Even Mercedes Benz?

    It could be a very different automotive landscape by the end of the decade.