The problem with CAFE is that it does not apply to trucks and SUV’s. So bear with me for a moment:
You are a car executive, choosing what car to make. On one hand, say there’s a station wagon. On the other, say there’s an SUV. The bean counters assure you they cost about as much to produce, but the station wagon has to comply to stricter regulations, and the engineers tell you they’ll have to work harder to make the station wagon comply to the law.
Meanwhile, the SUV costs about as much to make, but has way fewer rules it has to comply with. The marketing team tells you they can sell both vehicles just as well, though you may be able to set a higher sticker price for the SUV.
Do you build the more heavily regulated station wagon, knowing your margins are thinner? Or do you take the easier option with bigger margins and build the SUV?
You’ll even see the outcome IRL. In the US, Ford tries to convince you that the car you need for your family is a pick-up truck with a crew cab. Meanwhile, in the European market, where larger cars start costing much more much sooner, the same segment gets offered a seven seater minivan.
Removed by mod
The problem with CAFE is that it does not apply to trucks and SUV’s. So bear with me for a moment:
You are a car executive, choosing what car to make. On one hand, say there’s a station wagon. On the other, say there’s an SUV. The bean counters assure you they cost about as much to produce, but the station wagon has to comply to stricter regulations, and the engineers tell you they’ll have to work harder to make the station wagon comply to the law.
Meanwhile, the SUV costs about as much to make, but has way fewer rules it has to comply with. The marketing team tells you they can sell both vehicles just as well, though you may be able to set a higher sticker price for the SUV.
Do you build the more heavily regulated station wagon, knowing your margins are thinner? Or do you take the easier option with bigger margins and build the SUV?
You’ll even see the outcome IRL. In the US, Ford tries to convince you that the car you need for your family is a pick-up truck with a crew cab. Meanwhile, in the European market, where larger cars start costing much more much sooner, the same segment gets offered a seven seater minivan.