New Federal CAFE Standard Announced by President Obama; Comments

New Federal CAFE Standard Announced by President Obama; Comments


New Federal CAFE Standard Announced by President Obama; Comments

SANTA MONICA, Calif. — May 19, 2009 — Today changes are being announced for the Corporate Average Fuel Economy (CAFE) regulations, which are intended to encourage automakers to build and sell more fuel efficient cars, leading to a cleaner environment and less dependence on foreign oil. The new regulations will eliminate the discrepancy between the federal standard and the standards generated by California and other states, making it easier for automakers to coordinate their product plans for the United States market.

However, fundamental problems with CAFE remain.

"Defining what should be built does not create demand," asserted CEO Jeremy Anwyl. "There are tons of great fuel-efficient cars out there today but most consumers aren't interested, and CAFE doesn't deal with the demand side at all."

"A lesson regulators and many in the green community still haven't learned is that autos are still a major investment made as much with emotion as with common sense," wrote John O'Dell, Editor of "It won't matter that the vehicles that result from this national program effort average 50 or 60 miles per gallon if no one wants to buy them."

Automakers whose sales-weighted average fuel economy is above the CAFE standard must pay a fine to the government. A number of automakers resign themselves to paying that fine each year since it is more cost-effective and less brand-damaging than attempting to sell unwanted vehicles just to meet the standards.

"For some automakers, it would be market suicide to meet CAFE standards," Anwyl acknowledged. "Minimizing our impact on the environment is a great goal, but this isn't the way to get there."

Instead, Anwyl suggests that politicians look overseas for ideas and inspiration.

"One reason that foreign automakers do well when gas gets expensive here in the US is because they need fuel efficient vehicles for their home markets, which have high fuel prices that are consistently inflated through taxes," noted Editor Michelle Krebs.

Also, some countries levy a heavier tax on vehicles with higher horsepower and bigger engines.

Consumers are currently debating the issue in an online discussion entitled "Has CAFE reached the end of its usefulness?" in the established Forums (at

Some spokespeople are available for interviews in's television studio in its Santa Monica, Calif. headquarters.

About Edmunds
Edmunds publishes four Web sites that empower, engage and educate automotive consumers, enthusiasts and insiders., the premier online resource for automotive consumer information, launched in 1995 as the first automotive information Web site. Its most popular feature, the True Market Value®, is relied upon by millions of people seeking current transaction prices for new and used vehicles. was named "Best Car Research Site" by Forbes ASAP, has been selected by consumers as the "Most Useful Web Site" according to every J.D. Power and Associates New Study(SM), was ranked first in the Survey of Car-Shopping Web Sites by The Wall Street Journal and was rated "#1" in Keynote's study of third-party automotive Web sites. Inside Line launched in 2005 and is the most-read automotive enthusiast Web site. CarSpace launched in 2006 and is an automotive social networking Web site and home to the oldest and most established automotive community. launched in 2007 and provides insightful automotive industry commentary and analysis.
Edmunds is headquartered in Santa Monica, California, and maintains a satellite office in suburban Detroit.

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