New safety standards in the U.S. to increase prices on cars, depress sales

Article by Christian Andrei, on December 17, 2010

If the U.S. imposes its most stringent emissions and safety proposals for 2025, the average vehicle cost would increase by over 22% and this will reduce sales and hamper employment, according to research group Center for Automotive Research.

The Ann Arbor, Mich.-based group estimates that if gas prices double in that span, the cost-increase estimates, which make up the consumers' fuel savings from improved efficiency, would fall to 10%.

Last October, the Obama administration said that U.S. carmakers may be required to nearly double vehicle fuel economy to over 60 mpg by 2025. The group also said that earlier this month, auto-safety regulators proposed requiring backup cameras.

It’s possible that the regulators would also require more air bags and technologies that make sure that drivers are alert. In a presentation in Ypsilanti, Mich., Sean McAlinden, chief economist for the group, said that these proposed mandates pose a “considerable challenge.”

He said that what the group recommends is for there to be a serious study of the likely future costs of these new technologies and then for these mandates to be revised to attain certain policy objectives. [via autonews - sub. required]

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