Let Them Try Harder
A decade ago, with the energy crisis much on its mind, Congress hardened its heart against the moans and groans of the auto industry and ordered tough fuel-efficiency standards for new cars. The payoff has been impressive. Steadily improved mileage gains have shaved foreign oil purchases by billions of barrels, and saved motorists billions of dollars. But now Ford and General Motors, most of whose business comes from selling bigger and thus less fuel-efficient cars, are crying for relief. They have the Reagan Administration on their side.
Ford and GM have fallen short of meeting the fuel standards for the last two years, but because of earlier success in meeting the requirements they had credits to offset these deficiencies. But now the credits are running out, and Ford and GM, unable to meet this year’s 27.5-miles-per-gallon fleet average on the cars that they sell, face heavy fines. In Ford’s case those could come to $150 million, and for GM as much as $500 million. The Big Two want the fuel-economy requirement rolled back to 26 miles per gallon. Both the Energy Department and the National Highway Traffic Safety Administration, which administers the standards, sympathize with that request.
The Administration’s unsurprising position is that auto-efficiency standards should be set in the marketplace, rather than by government controls. Now the marketplace is a wonderful thing, and it can usually be counted on eventually to give consumers what they want. Of course, the last time there was a free market in cars millions of people each year chose to buy Japanese products, not least because of the superior mileage that they delivered compared to American models.
The free market worked so well in the late 1970s, in fact, that U.S. auto companies came close to losing their shirts and hundreds of thousands of auto workers lost their jobs. In response the Reagan Administration, without any great objection from a worried Congress, pressured Japan into slashing its auto exports. This form of government control, however, was considered salutary by everyone involved--except, of course, consumers, who had trouble getting the cars that they wanted and who were forced to overpay for what they bought.
Four years of quotas worked to keep at least 2 million high-mileage cars from Japan off American roads, and in so doing lowered the overall fuel efficiency of the U.S. vehicle population. Meanwhile, after 10 and more years of trying, the Big Two American auto companies find that they still can’t economically build and sell enough small cars to raise their fleet-mileage average to acceptable levels. This they blame on the public’s revived preference for the bigger and more profitable cars that they choose to build.
Chrysler, however, is able to build and sell small cars, and is able to meet existing federal mileage standards. That’s why Chrysler opposes changing the mileage rules now. Its argument, and it’s a good one, is that to roll back the standards would be to punish Chrysler for its success and put it at a competitive disadvantage in the marketplace. There’s no more justification for doing that than there is generally for watering down the mileage standards. They’ve worked, to the national benefit, and they should be retained. Ford and GM ought to be told that they will just have to try harder.
