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54.5 MPG Standard by MY2025 a Daunting Challenge
FENTON, MI (July 29, 2011)— The recent agreement between the government, automakers and environmentalists to meet a 54.5 mpg fuel economy standard in 2025 is a significant challenge, according to the Michigan-based Defour Group.
“We are clearly in uncharted waters,” Dean Drake, president of the Defour Group , said of the proposed standards, “Never before has the automotive industry been asked to do so much in such a short period of time.”
“Many things must go right if the industry is to meet these standards without costing the economy jobs,” Drake added. “Major factors that will dictate the economic success or failure of the standard, such as future fuel prices and the strength of the economic recovery, are out of the industry’s control.”
In an earlier study, the Defour Group estimated a 56 mpg standard would cost 220,000 jobs in the automotive industry in 2025. “There are a number of aspects of the 54.5 mpg standard agreed upon that are different from the earlier 56 mpg proposal,” Mr. Drake said. “A thorough economic analysis of the 54.5 mpg standard is required before we can assess the impact of this new standard on jobs."
STUDY: 56 MPG Standard by MY2025 to Cost 220,000 jobs
62 mpg could put almost 300,000 out of work
FENTON, MI (July 7, 2011)—A white paper from the Michigan-based Defour Group finds that a significant number of auto sector jobs would be lost if the federal government’s proposed fuel economy mandates for Model Year (MY) 2017-2025 vehicles were implemented. Federal regulators, currently meeting with automakers behind closed doors, are considering increasing the standards to as high as 56 mpg to 62 mpg over that time period.
Dean Drake, the paper’s author, confirmed a U.S. Energy Information Administration estimate that automakers would sell 2.4 million (approximately 14 percent) fewer new vehicles if standards are set to hit 62 mpg by 2025.
“Clearly, sales losses of this magnitude could be expected to lead to job losses in the industry,” Drake said.
Drake bases the study’s job loss numbers on the National Highway Transportation Safety Administration (NHTSA) analysis of the 2012-2016 MY CAFE standard that said that one job would be lost by the OEMs and their suppliers for every 11.3 new vehicle sales which fail to sell. The study also calculates dealerships job losses as a result of fewer new car and truck purchases.
PROPOSED TARGET (MY17-25)
LOST JOBS (OEM, Supplier, Dealership)
56 mpg (5% per year)
“These projected job losses will NOT be offset by the development of new technologies creating so called ‘green jobs’ as many contend,” Drake added. “The advanced technology vehicles such as electrics will only make up a small part of the new vehicle fleet. Plus there is no guarantee that these new jobs would stay in the United States.”