Lobbyists for big automakers, both domestic and foreign, make no secret about their desire for lower fuel-economy standards.

One argument presented to support a lowering of standards is that the cost of compliance with current rules will be passed on to consumers in the form of higher new-car prices.

Carmakers must implement efficiency-boosting technologies on a larger scale, said Mitch Bainwol, head of the Alliance of Automobile Manufacturers lobbying group, and this could "put new vehicles out of financial reach of the average new-car purchaser.".

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Yet while the prices of new cars may be increasing, fuel-economy rules are not to blame, argue analysts Alan Baum and Dan Luria in a recent op-ed published by The Hill in response to Bainwol's comments.

They accuse the industry of using efficiency standards as a "convenient boogeyman," and attribute price increases largely to the current popularity of SUVs and the rising expectations of higher-income buyers.

New-car prices have indeed gone up over the past few years, hitting a record high of $34,077 in 2016, according to Edmunds.

Money and car keys

Money and car keys

That represents a 2.6-percent increase over the 2015 average, and a 12.6-percent increase in the five years since 2011.

This is partially due to robust demand for SUVs, which tend to be more expensive than cars.

Utility vehicles now account for 62 percent of the U.S. new-car market, and because they too comply with fuel-economy rules, they're far less thirsty than they were a generation ago.

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Sustained low interest rates and longer loan terms made possible by more reliable vehicles also act as incentives for consumers to buy more expensive vehicles.

But income inequality may also be an overlooked factor, argue Baum and Luria.

Rising average vehicle prices are moving out of the range of affordability for low- and middle-income households, while wealthier consumers demand more luxurious vehicles, they say.

2017 Honda Pilot

2017 Honda Pilot

They note that new cars are offered with a greater array of standard features, and that automakers are adding more high-end trim levels to their lineups across the board.

Baum and Luria suggest that this is to cater to higher-income individuals and families, who have realized most of the income gains in the U.S. over the past decade and a half.

Higher-end trim levels also tend to be more profitable than vehicles with fewer features, so automakers have an economic incentive to build and sell them.

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It's also worth noting that the NHTSA and EPA have estimated the cost of compliance with the full ramp-up of Corporate Average Fuel Economy standards from 2012 to 2025.

The two agencies jointly predicted that the real-dollar price would be slightly less than $3,000 per car.

Thus far, no comparable analyses appear to have been done of the cost of added convenience and safety features already added to new cars and those expected in future.

2015 Ford Edge Titanium

2015 Ford Edge Titanium

And that's what would be required to justify Bainwol's suggestion that fuel-economy rules alone will price cars out of the market for average buyers.

Because if the assertions by Baum and Luria hold water, the automakers may be doing that all by themselves.


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