Friday, June 22, 2007

Fuel efficiency ain't so hard

As most people paying any attention to the news know, the Senate yesterday (June 21, 2007) passed legislation that would require "car manufacturers...to increase the average mileage of new cars and light trucks to 35 miles per gallon by 2020, compared with roughly 25 miles per gallon today." That is, of course, if the House will agree to this.

Car manufacturers act as if it is going to take some kind of miraculous technological break through to achieve this kind of gasoline efficiency. Hogwash. I drive a car, that I bought brand new in 1999, that currently (and has always) gotten 50 miles to the gallon, day in and day out. On some long trips I get 55 miles to the gallon. What kind of miracle car is this? It's a Chevy (formerly Geo) Metro, a 3 cylander, 5 speed, manual transmission hatch back, that cost me only $8,000. Eight years later, the car has 102,000+ miles on it, and other than regular oil changes has only needed, 4 new tires, 1 new battery, and 1 new muffler. At the very height of the gas prices (late May/early June) I was putting just over $20 in my tank at approximately 2 week intervals. Imagine that, my monthly cost for gasoline was about $45 at the peak of the gas prices. We're talking high reliability, low maintenance, low cost transportation here.

This is no fancy, expensive hybrid. Hybrids generally get less gas mileage than my all gasoline combustion engine Metro, and hybrids wouldn't do me any good anyway, because less than 5 percent of my driving is "city" or "stop and go" driving, since I live, work and shop in a rural/non-metro area. There are exactly 3 stop signs and 2 traffic lights in the 13 miles between my home and work so when would the hybrid "recharge"?

Since this high gas mileage technology is obviously well understood (my car is after all 8 years old), and not at all expensive (the car cost me $8,000), why is there so much resistence by manufacturers and dealers to increasing energy efficiency of cars and light trucks? The simple answer is profit.

Lighter, simpler, more fuel efficient cars are cheaper to make, and cheaper to sell. And therefore bring in less profit. The math is simple.

Dealers profit margins on each automobile sold are between 10 and 20 percent of the selling price (profit margins differ primarily because buyers have different degrees of sophistication in negotiating). Let's imagine a Chevrolet dealership with 10 customers purchase vehicles in a week. Chevy vehicles range from $11,300 for the lowest priced Chevy Aveo (similar in many ways to my Metro, but not a fuel efficient at 37 mpg highway and 27 mpg city) through $24,900 for a Chevy Impala (a mid-sized, mid-range car that gets 29 mpg highway and 20 mpg city), maxing out at $35,200 for the Chevy Tahoe (SUV for which Motor Trend doesn't even have fuel efficiency information). If this dealership sells 10 vehicles that average $11,300 dollars, they gross $113,000 and at 10% profit make $11,300 in profit for that week. If the same dealership sells 10 vehicles that average $24,900 the gross $249,000 and at 10% profit make $24,900 in profit for that week. If they manage to instead sell, 10 suv's at $35,200, then they gross $352,000 and with 10% profit make $35,200 in that week. It takes the same basic overhead costs of lot, building and materials and staff to sell 10 fuel efficient Aveos as it does to sell 10 fuel inefficient Tahoe's, but you make three times as much money in the same time, with the same effort.

Why do consumers accept this? Because they are bombarded on all sides by advertising that tells them that they have to have more POWER. Only wimps drive fuel efficient vehicles. If your business or livelihood requires you haul live stock or horse trailers behind a truck, or carry payloads of brick or lumber, sand or gravel on a regular basis, then I do not begrudge you the power necessarily to do that. If you have six children, and have to get them back and forth to school in a van than by all means, go to it. But I see so many people driving back and forth to work and the grocery store in huge trucks and SUV's that never carry a payload larger than a weeks worth of groceries in the back. In eight years there have been only two occasions where I needed to haul more than my little Metro could handle and for $50 each time, I could get the Lowe's store to deliver directly to my door.

Folks moan about how small cars aren't as safe as trucks and SUV's. Well, then they should learn to be better drivers. You pay attention, you stay sober, you don't talk on the cell phone will you drive, you drive at or below the speed limit and don't try to pass every car on the road, you don't drive when you are sleepy, and you drive defensively and intelligently, you too can have 40 years of driving small fuel efficient vehicles with not a single accident.

And that's my self-righteous rant for the day!