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Fuel economy goals raise concern for vehicle affordability

November 1, 2010

By Ray Scarpelli Sr., Metro Chicago NADA Director

Following the Obama administration’s announcement that it will begin looking at stringent fuel economy standards for the 2017-2025 model years, the NADA expressed concern that the cost of implementing new technologies may drive many American consumers out of the car market, citing the need to protect consumer choice and affordability.

The current standard is 27.3 miles per gallon for the 2011 model year. The first phase of the new national Corporate Average Fuel Economy program will raise the fuel economy standard to 35.5 mpg by model year 2016. But the administration could require automakers to more than double the 2009 average fuel economy of their fleets by 2025—to as much as 62 mpg.

"Less than five months ago, the administration issued the most expensive fuel economy mandates ever, estimated to cost industry and consumers more than $50 billion," the NADA wrote in a statement. "Now, before the ink has barely dried on those not-yet-implemented rules, the U.S. Department of Transportation, the Environmental Protection Agency and the State of California have decided to launch a new and far costlier set of fuel economy mandates that would require light-duty cars and trucks to achieve up to 62 mpg on average by 2025. Why the rush? Apparently, California regulators are once again threatening the administration with an unworkable patchwork of state-by-state standards at the expense of one national standard premised on sound analysis."

The NADA also cited the potential effect the administration’s proposal could have on the job market, as most Americans rely on affordable transportation to get to and from work.

In other legislative and regulatory news . . .

WASHINGTON – President Obama has signed the Small Business Jobs Act. Among other things, the law contains the framework for a new SBA Dealer Floorplan Program. The NADA is working with the SBA to develop the new floorplan program, which is expected to be rolled out this year. Eligible loan amounts will be from $500,000 to $5 million with a 100 percent advance rate, a five-year term, reduced fees and guarantees up to 75 percent. [Other 7(a) loans have guarantees up to 90 percent.] The Act also sets a new maximum alternative size standard of $15 million net worth and $5 million in net income as measured over two years

In response to the federal government’s announcement of revised safety ratings for 2011 model year vehicles under its enhanced 5-Star Safety Ratings System, the NADA will provide dealers with information on the following key points:

1. The New Car Assessment Program (NCAP) scores for model year (MY) 2011 may be lower than for previous models of the same vehicles, but that does not mean they are less safe.

2. The NCAP scores for MY 2011 and later vehicles should not be compared to those for previous model years.

3. Overall Ratings Scores reflect a weighted average of the three crash test results. All new vehicles are subject to rigorous Federal Motor Vehicle Safety Standards.  

4. The NCAP label will not be updated until MY 2012. The best source of NCAP information is

5. Only 50 or so models are NCAP tested in a given model year. Test results are made public as they become available.

In other NADA news . . .

2011 Convention & Expo Workshop Program Features New ‘Online’ Track
Among the 10 different tracks of workshops being offered at the 2011 NADA Convention & Expo is a new, rich "Online Presence" track featuring nine workshops that provide the nuts-and-bolts needed to address a gamut of Internet applications. Workshops will include top speakers from Google, DrivingSales, J.D. Power and Associates, AutoTrader, ActivEngage and more. The workshop program starts Friday, Feb. 4, with sessions at 1:30 p.m. and 3:15 p.m. To register, see 

NADA Co-Sponsors Dealer Day Conference at 2010 SEMA Show
The NADA is co-sponsoring the third annual Dealer Day conference at the 2010 Specialty Equipment Market Association convention in Las Vegas in November. "Sales of specialty-equipment accessories represent a $27 billion-a-year market, and it’s growing," says NADA Chairman Ed Tonkin. "This provides a tremendous opportunity for franchised dealers to expand their business operations and better meet the needs of their customers who shop for vehicle accessories." The Dealer Day conference, Nov. 3 at the Las Vegas Hilton, will give attendees the tools and resources they need to expand or build a dealership accessory department. Dealers attending the sessions also receive a free online course from NADA University’s Learning Hub, "Accessorizing Your Way to Additional Profits." For more information and to register, go to