Pub. 17 2018-2019 Issue 3

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E N O . 4 , 2 0 1 8 8 new jersey auto retailer NADA Director’s MESSAGE | BY RICHARD A. DESILVA, SR. A fewmonths ago, NADA President and CEO Peter Welch published an opinion piece that emphasized how the effort to improve vehicle fuel economy needed to take into account its impact on vehicle affordability. Think about it – a fuel efficient vehicle does nothing to improve the envi- ronment if it isn’t sold and put in service. That’s why the affordability question is critically important. As Peter pointed out, the average monthly payment for a new vehicle was $525 in June, according to Experian. That’s a $20 year-over-year increase. Those rising monthly payments are the number-one concern for car buyers today. The average loan amount for a new-vehicle purchase also reached new highs in 2018 and is now nearly $31,000. These rising prices are driving more people to purchase used vehicles. Even with a growing economy humming, low unem- ployment, increasing wages and steady consumer confidence, the ratio of new-to-used vehicles sold is approaching levels not seen since the Great Recession. The National Highway Transportation and Safety Administra- tion (NHTSA) and the Environmental Protection Agency (EPA) We Must View Improved Fuel Economy Through The Lens of Vehicle Affordability should take note of this trend, because as fewer new vehicles are sold (which are more fuel efficient) , fuel economy and vehicle emis- sions goals become harder and harder to reach. Peter stated that while the debate over fuel economy and emissions mandates raged, regulators failed to recognize that customer deci- sion-making would be solely responsible for the real-world success (or failure) of these mandates. Why? While federal fuel economy and vehicle emissions mandates force manufacturers to make and deliver more efficient vehicles to dealers, the law does not mandate the sale of those vehicles. NADA’s support for fuel economy and emissions regulations has always been contingent on policymakers understanding and em- bracing the impact those mandates would have on affordability. It is counterproductive if fuel economy mandates drive vehicle costs beyond the financial reach of working men and women. The auto retail industry has consistently supported flexible stan- dards that encourage the purchase of newer, cleaner vehicles over used vehicles and that don’t price customers out of the new-vehi- cle market. NADA has always stressed the importance of viewing public policy through the lens of consumer affordability. That’s why NADA champions the pursuit of the highest standards the industry can achieve while keeping new vehicles affordable. The math is simple. As new vehicles become less affordable, fewer are sold. Those lost sales result in consumers keeping their older, less safe and less fuel-efficient cars and trucks longer. If this trend continues, then legislators, regulators, automakers and dealers will be unsuccessful in advancing our shared goal of maximizing the number of new, fuel-efficient vehicles on the road every year. There are encouraging signs that Washington is beginning to get with the program. The new rule that NHTSA and EPA jointly pro- posed in August reflects a thoughtful and well supported analysis of the marketplace and projections of what the mix of vehicles will look like between now and 2026. Our expanded domestic oil and gas production has contributed to fuel prices well below what the 2012 rule predicted. And the light-duty fleet mix has changed significantly, with light-truck sales far exceeding passenger vehicle sales now and for the foreseeable future. The new NHTSA-EPA rule must consider the market reali- ties of the showroom and not stifle sales of new vehicles. Simply put, consumer affordability must drive public policy deci- sion-making.