The National Journal and the Washington Area New Auto Dealers Association co-hosted a policy summit today to kick off the 2013 Washington Auto Show, bringing together policy makers and automotive industry officials to discuss several matters. Titled, “Affordable Mobility: A Roadmap to Energy Efficiency,” the two-hour summit was split evenly between an expert panel discussion and a report from the automakers.
National Journal’s Fawn Johnson moderated the panel discussion. Participants were: Mitch Bainwol, president and chief executive officer of the Alliance of Automobile Manufacturers; Don Chalmers of the National Auto Dealers Association; Gina McCarthy, Assistant Administrator, EPA Office of Air and Radiation; Mary Nichols, Chairman, of the California Air Resources Board; and Rebecca Lindland, Director, Automotive Research, IHS Automotive.
WANADA’s Gerard N. Murphy introduced Johnson who queried the panel. Chalmers noted the importance of the auto industry to the national, indeed the global economy, citing that 15 percent of US retail sales is made up of car sales volume. The industry, including manufacturers, suppliers and dealers, also employs tens of millions of Americans.
Chalmers expressed concern about both the pace of the new 54.5 mpg fleet mandates required by 2025 and consumer willingness to accept the changes. He noted that the US is a “very, very diverse country with very, very diverse consumers.” What the city dweller might be interested in driving is far different from what the consumer in Oklahoma, New Mexico and elsewhere might want.
He also raised an issue that has heretofore received scant attention: the impact of consumer financing. With 90 percent of new vehicles leased or purchased, loan underwriters such as banks are not concerned about fuel mileage and emissions standards, rather about loan-to-value ratios, a point that Lindland reiterated.
Both McCarthy and Nichols stressed the accomplishments of their respective government agencies — EPA and CARB — with successfully helping manufacturers build more fuel efficient vehicles while also reducing greenhouse gases. The EPA is in the process of adopting Tier 3 rules for the control of air pollution from motor vehicles, a sulfur reduction initiative pioneered by the Golden State.
Throughout the panel discussion and again with the industry report, “mid term review” came up numerous times. Groups such as Auto Alliance have called for one or more reviews especially as the rules extend out by 13 years. Reg Medlin, Director Regulatory Affairs for Chrysler, called for a “robust” midterm review, one that would evaluate where the market has come from and to adjust accordingly for the intervening years.
Lindland noted that policy makers and industry leaders should be alert to certain “unintended consequences” that could adversely impact the changes that are rolling out. She noted that affordability is the biggest issue for many consumers, while also citing that personal wealth is an important factor for the adoption of EVs and other advanced powertrains. Indeed, the average income of Chevrolet Volt and Nissan LEAF buyers is about $150,000, compared to $68,000 for all car buyers. Lindland asserted that the greening of the US consumer fleet could be stymied if the cost of vehicle ownership rises.
Bainwol, on behalf of the AAM, took a more middle of the road approach. He noted that automotive manufacturers want certainty over time especially as they seek to invest billions of dollars in new technologies. Still, there is much risk involved as consumers adapt to new vehicles with “no one really knows” how they will respond. Bainwol reiterated calls for a mid-term review to gauge what consumers are buying.
The second part of the policy summit included Reg Modlin who was joined by Robert Bienenfeld, Senior Manger, Environment & Energy Strategy, Product Regulatory Office, American Honda Motor Co., Inc. and Tom Stricker, Vice President of Technical and Regulatory Affairs, and Energy and Environmental Research for Toyota. National Journal’s Amy Harder moderated.
The industry leaders stressed that the “2025 fuel economy standards are ambitious” for reducing greenhouse gases and in improving fuel economy. The three gentlemen agreed that there needs to be clear rules, that the rules must be technologically neutral and competitive. Once again, what consumers will do for the short-, mid- and long-term remains the unknowable part of the equation, something that lawmakers and industry leaders will need to keep in mind as they move forward.