A common auto industry argument against CAFE - regulation that requires automakers to make their overall vehicle fleet get more miles per gallon - is that it will just force small cars on the road and big vehicles off. The argument goes that the automakers will not be able to improve cars and the only solution will be for automakers to build small cars, which get higher miles per gallon simply because they are small. This not only degrades choice in the market but it hurts the car companies because they are making a product people don't want. Here is GM vice Chairman Bob Lutz saying CAFE won't change what consumers want when he spoke with Inside Line last December:
"As long as [gas] is around $2 per gallon here, people will exercise their freedom to buy the vehicle they want, V8 engine and all. ... Forcing us to alter the fleets to hit some theoretical average won't change what consumers want, or what they'll buy."

This would seem to contradict what he said in an interview with Autoline Detroit last month, which you can watch below the fold. In that interview Bob seems to say, CAFE laws actually change what people want but in a way that just might surprise you. Here is that quote:

"If we really get say every vehicle with that jump, the same thing will happen that happened last time. People don't keep the size of car they had and say, oh, this is wonderful, I am now saving $30 a month on my fuel bill. They say, oh, this is wonderful now I can pay for fuel for
the next larger size. That was happening with the last CAFE legislation. People abandoned cars and went into full size V8 sport utilities."

Even if this is a not a direct contradiction, the idea that CAFE caused the SUV fad and CAFE will only push us into vans, explains a few things like GM's unusual interest in making very large hybrids. GM must think larger, more efficient vehicles are the future, popular vehicle choice. (Tip: Watch the entire video below the fold to hear Bob talk about his 3 Segways.)

[Source: Autoline, Inside Line]


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