Asymmetrical Information

Toyota and Honda are probably losing money on the hybrids if you include R&D costs. However, Toyota is said to be breaking even on the production costs of the Prius. However, I look at the current hybrids as the "beta tests" of hybrid cars, the Windows 3.1 of the concept. Windows 3.1 was the first workable version, and the Prius is the first workable hybrid. A coworker has one and it is a good, practical city car.

CAFE is part of the reason for higher SUV prices... but it still doesn't explain why automakers aren't price competing in that particular market segment, if for no other reason than to push less efficient automakers out of the market.

You could get rid of CAFE standards and you'd still see high SUV profit margins. Why? Because SUVs are luxury goods. Price insensitivity in the luxury market in general is well-documented and I would argue is 99% of the reason you see such huge profit margins in that market.

It seems that all the research time Jane claims to invest before she posts (as she claimed two weeks ago) is not really spent in the library with dusty books. She's starting out for the library and then taking a wrong turn and necking with neocon boys out behind the Tasty-Freeze.

They must be the ones charming her with stories about how the devilish government is taking their wheels and as soon as the department of transportation returns their SUVs they will be joyriding again.

Well, the skateboarders are lying to you again, Jane.

First, compacts are not included in the Corporate Average Fuel Economy averages that apply to SUVs. SUVs are considered light trucks and face a much easier standard (20.7 mpg) than compact cars (27.5 mpg). The fleets are averaged separately.

Dividing the fleets like that is awful policy and that's what created the SUV phenomenon. It was easier to turn luxury cars into light trucks by adding leather to panel vans than it was to invent an impossible fuel economy improvement with 1970s technology. Now we have SUVs everywhere and they are far more dangerous than big luxury cars ever were. First, they kill three times as many people in regular size cars in multi-car collisions because of bumper height and therefore create a safety arms-race in bigger and higher cars. Second, higher cars like the big SUVs roll over enough to kill four times as many of their own occupants. In fact, the biggest and safest of SUVs like the Chevy Suburban is about as safe for its occupants as a Honda Accord (small, but not subcompact). For people in other cars, the Suburban is three times as dangerous in a crash and therefore it should be severely regulated, not given a free pass by easier CAFE standards. Meanwhile, big cars that are not SUVs are much safer for everyone but they have virtually disappeared due to differential CAFE preferences for SUVs.

Second, the penalty for violating the CAFE standard is $55 per mpg over the limit per car. If you could simply add $55 to the price of every car, you could build as many cars as you want with one mpg less fuel efficency. The biggest remaining manufacturers of luxury cars do just that. As you might suspect they are makes with only luxury cars so that the penalty is not spread to millions of cars in a big fleet. BMW, Mercedes, and the like routinely exceed CAFE and pay the price. That means a $10 000 margin on SUVs would allow an decrease in MPG from 20.5 to flat zero and still leave about 80% of the margin. So Jane's explanation for the discrepancy is obviously silly.

I don't know why SUVs are overpriced, but I know that CAFE isn't it.

And I know that CAFE is dumb. The real policy to improve fuel economy is to increase gasoline taxes. Raise them 75 cents or a dollar a gallon and the federal government will be able to cover most of the federal motoring direct subsidies that currently come out of the general fund (state subsidies will still be monsterous). Raise them two dollars and we can really put a dent in the money we send to overseas crazies in Saudi Arabia, Kuwait, Nigeria, Iraq, and Venezuela.

What Thumper said. CAFE might explain why tiny cars are cheap, but it doesn't explain why SUVs are expensive. SUVs aren't covered by CAFE, so shouldn't there be more competition there?

The "luxury goods" argument seems tenuous too. After all, don't SUVs own about 50% of the market these days.

It seems like there's more here than just this.

That's not quite correct. Probably what sustains margins is tacit collusion among automakers, combined with relatively price-insensitive consumers. However, they're not price-oblivious. Manufacturing SUV's at current fuel efficiencies would certainly increase the cost of the SUV's, reducing the profits that subsidize the compacts. If they're passed on to consumers, it would reduce the number of SUV's sold, meaning that fewer compacts would have to be sold to offset them, meaning a price increase. Now, depending on whether they get their own standard or are averaged in, the net effect would either be an increase in teh price of compacts (good for the environment & auto fatalities, bad for suburban parents) or an increase in the number of compacts sold (good for suburban parents and young workers, bad for auto fatalities and the environment).

Well, I'm not sure where this $5-$10,000 profit margin 60 minutes is citing comes from. I doubt it's from the S-10 Blazer market, and I would bet it's from the Escalades and H2s.

I'm sorry, Kevin -- I thought the question you were asking was about the differential between the profit margins, rather than why SUV's themselves earn the price they charge. SUV's are expensive because they cater to a price-insensitive market segment and there are sufficiently few producers to allow tacit collusion. Those consumers are price insensitive because they want power and performance.

However, it's wrong to say that there's no relationship between the margin on high-end cars and the fact that automakers are giving away compacts below cost. The automakers have a required return on their capital in order to cover their costs -- if they're giving it away one place, they have to jack up costs in another. The automakers haven't been making so much money that they have economic profits to spare. And while I'm well aware that the fleets aren't averaged together, the consensus I've heard is that the compacts, in addition to bolstering CAFE, act as a sort of PR loss leader for the profitable segments. I agree the division seems stupid on its face, but there are valid reasons for the split having to do with the sheer impossibility of making a working truck that is as efficient as a light sedan, and it's harder to draw a bright line between an SUV and a truck than you think; most legislators recognize the fact that a) they can't legislate pickup trucks out of existance, or double their cost, without killing small businesses and b) any law designed to single out SUV's will founder on the automakers' ingenuity at making their SUV's superficially conform, which is why the fleets are separate. I also agree that a gas tax is a much better way to go, and have said so several times. The rest of what you said just bolsters my point -- the luxury market violates CAFE because they don't care what they pay. They're subsidizing the rest of us, who do. I didn't claim that SUV's were safe -- I only claimed that compacts aren't, which they aren't. It's not a battle over the moral superiority of SUV's -- I was trying to answer an interesting question about the regulatory structure of the auto market. Which, as it turns out, Kevin didn't ask, but there you are.

At any rate, the automakers aren't doing so hot right now, so any raise in costs on SUV's will be matched by a change in the cost structure of the compacts -- the automakers are bleeding from the ears over 0% financing, and they can't mount a sustained battle over it.

I also wonder about the whole car-tuning craze. Maybe I'm paranoid, but I suspect some of these companies are purposely designing fuel-efficient, underpowered cars that can be cheaply converted to gas-guzzling pocket rockets, while keeping their high CAFE numbers. Any gearheads out there who can tell me if I'm completely off-base here?

Mike,

Being a gearhead, I think you can rest easy on the tuning craze. Probably 90% of the tuning done by these kids is bolting on fiberglass pieces.

Us gearheads comprise a small enough percentage of the population that we don't affect overall consumption patterns. For example, I drive a Jetta (23 mpg) and a 65 Falcon (dual turbo 302, 450 hp, 8 mpg), but I put 20k/year on the Jetta, and 3-4k/yr on the Falcon.

Out here in Colorado, the SUV is almost the state auto. Almost every family has one. They are the only car you can get now that carries the family, and can tow large objects.

I suspect part of the price issue is that the automakers try to sell at certain price points. The 35K price point is currently real hot, and there is a whole bunch of cars and SUVS right there. SO there is no collusion amoung car makers, just these recognized price points with similar levels of equipment. Now, if you can design a car that competes for 35k price point, but only costs 25k to make...

Sorry for the rambling.

--Stephen

First of all, it's not true that SUVs are safer for their occupants than compact cars. I'm trying to find the link, but I saw statistics not long ago showing that SUVs are actually marginally *more* dangerous for their occupants - in car-to-car crashes the SUVs had lower fatalities than cars, but the whopping-huge rollover rate was enough to more than make up for it.

I, too, have heard how the car companies are losing money on their small cars, but I have to wonder about that. I know that for Nissan, their bestselling car is usually the Sentra, which also happens to be their smallest.

mike: over at http:cartalk.cars.com Click & Clack have repeatedly answered your question: no, there is no good way to overclock your car without major disadvantages (huge drop in mileage, plus you're basically ruining your engine).

Well, mike, an efficient car produces the most horsepower it can for a given amount of fuel.

Most "tuning" upgrades increase the amount of air the engine can process, which also increases the quantity of fuel the car uses. More power, more fuel. Many horsepower increases can be attained without the sacrifice of adherence to CARB standards. It's only when you get to messing with timing advance and compression ratios that you really start getting into richer fuel mixtures and higher required octane ratings.

However, the reason cars aren't built with these enhancements in the first place is cost. You can pour several thousand dollars into your basic "pocket rocket" tuneup, and that's all a hit to the bottom line.

Another often-overlooked factor is tires. No question, a good set of tires with stiffer sidewalls and higher profile (usually these go hand-in-hand) allow for much better maneuverability and get you off the starting line quicker. But the skinny, unattractive tires those pocket rockets come with, stock, have lower rolling resistance, which means better gas mileage. They don't look as nice, but they're cheap and give better mileage.

It's easy to explain -- two vehicles occupy the same marketplace, car buying. One has stricter regulations as to safety, gas mileage, emissions, et al. One has looser safety (stupidly, SUV's have lower required roof strengths -- the car more likely to roll over is also more likely to have the roof cave in. Said the man who drives a convertible with aftermarket roll bar), mileage, and emissions requirements. Effective subsidy -- it is cheaper to make a vehicle with the same stats by conforming it to SUV requirements. Lower cost/same price market = higher profit margin.

Jane, your commentary only answers why car makers just simply don't construct SUV's exclusively, not why they are so profitable.

The correct answer is basic marketing. You have a niche that sees a perceived value in SUVs and has the means to spend more money. Simple as that.

I don't think it's accurate to say that compact cars aren't safe, in and of themselves. That's a pretty extreme statement, and not one which is borne out by the statistics. They're less safe than bigger cas but it's not a big binary switch.

And compacts are actually more safe than pick-ups, and only slightly less safe than small SUV's. While large SUVs are safer than small cars but about the same as mid-sized to large cars. (All these comparisons are on the basis of fatalities per million vehicels in the US.)

And in single vehicle collisions, small cars are actually as safe or safer than SUV's (it's about the same across all vehicle classes if you take out the effect of rollovers where SUV perform horribly), which indicates that the size differential is an important driving factor behind the increased fatality numbers of small cars, contra to what you said in your post.

Anyway, it's a continuum, and it's not true that compact cars are outliers on the curve, way off the safety numbers of other vehicles. Nor is it true that SUV's are safer than other vehicles, plus they certainly do cause more deaths in other drivers, a big external cost for SUV ownership.

Stats: http://www.highwaysafety.org/safety_facts/fatality_facts/passenger_vehicles.pdf

“Anyway, in order to make up the money they're losing on the compact and sub-compact market, the automakers jack up the rates on the rest of us.”

Huh? That doesn’t make any sense to me. If they’re economically rational, the automakers will charge the price that maximizes profits on their SUVs regardless of how much money they make or lose on other cars.

Also, I believe it’s only the domestic companies that lose money on compacts and sub-compacts. Foreign automakers still make money on them.

Granted that the plural of 'anecdote' is not 'fact', I still have my own perspective to share.
SUVs profit margin is higher simply because people are willing to pay more for 'em. That's it.
I bought a Honda CRV last year. I really liked the ride, the upright seating, etc. They told us the price, we talked 'em down, we compromised, sold.
After all was said and done, I realized that we paid an Accord-level price for Civic-level luxuries. I was a little bummed when I realized that (partly because the Accord had always seemed above my level), but quickly realized that we had STILL gotten a great deal on an SUV. Vehicles of similar size/power/comfort were slightly more expensive than what we spent.
I can't believe I'm the only person to experience this.

In your list of ways to increase fuel efficiency you left out innovation and R&D.

I wish there was a debate amongst engineers (real ones, automotive ones, not chemists (I'm a chemist), not civil engineers or environmental engineers) about whether the internal combustion engine was going to go away. I keep hearing optimism from Green-types about this sort of thing -- witness Bill Clinton's remarks in the latest Atlantic Monthly that we're missing out on a trillion-dollar market and the line in the movie "The American President" that "in ten years, the internal combustion engine will go the way of the dodo."

Is the low-hanging fruit gone? Or is someone going to come up with the widget that is going to make us all go 200 mpg and make that person rich?

Or -- [sinister tone] have they invented it already?!?!?

The problem with nearly all engines that utilize combustion to extract energy (and they nearly all do, whether it's at the powerhouse or in the cylinder) is that most of the energy is wasted as friction or as exhaust heat. Another problem is that because the engine runs whether you're actually moving or not (hybrids attempt to address this) you lose all the energy it takes to keep the engine moving.

If we could only get rid of that pesky friction, we'd be in a lot better shape. Rather, if we can only selectively get rid of it.

1976 Cordoba would be a piece of cake. I took my driving test in a 1973 Suburban. 455 engine with 4:10 rear end - 8 mpg with or without a trailer,up hill or down hill,down to 7 mpg after about 125,000 miles - it was terrible when gas went to 60 cents a gallon.

I have absolutely no problem with guilt tripping Americans over their selection of a SUV over a more modest vehicle when it is not a rational purchase. We are at war and should not hesitate to conserve energy. Do you really need such an automobile? Have you thought this out---or have you succumbed to a well put together advertising campaign? I get the distinct impression that many buy a SUV for reasons of conspicuous consumption.

I wonder about the profit margin numbers. "Profit" and "cost" are notoriously slippery concepts. Is "profit margin" just selling price minus parts and labor costs, or does it include a meaningful allocation for cost of capital (ie, the stamping presses used to form the bodies)? Perhaps SUV production is more capital-intensive, and the true margins are lower than quoted...

Doug Trumbell:
Anyway, it's a continuum, and it's not true that compact cars are outliers on the curve, way off the safety numbers of other vehicles. Nor is it true that SUV's are safer than other vehicles, plus they certainly do cause more deaths in other drivers, a big external cost for SUV ownership.

Yes. Another study,
An Analysis of Traffic Deaths by Vehicle Type and Model by Ross and Wentzel
"... Our main results are that sport utility vehicles (SUVs) are not necessarily safer for their drivers than cars; on average they are as risky as the average midsize or large car, and no safer than many of the most popular compact and subcompact models. Minivans and import luxury cars have the safest records. If combined risk is considered, most cars are safer than the average SUV, while pickup trucks are much less safe than all other types. ..."

The secondary point which shows in the graphs is that models in most categories are spread over broad ranges of safety. It is a mistake to talk about the safety of compacts or SUVs as if they were all the same.

Of course, some of the increased SUV risk is due to the "seatbelt factor"; some of people who drive SUVs believe they are safer so drive them more aggressively than they would a subcompact (just as some drivers who wear seatbelts drive more aggressively because they feel safer; thus mandating seatbelt use does not have produce as much an improvement in fatality/injury rates as you'd expect, because now idiots drive 120 belted instead of 100 unbelted). There's a mutual reinforcement at work that produces the levelling effect.

Thanks, Jane. The next time I'm grumbling over an SUV hogging the road, blocking my vision, or being driven by an inept driver who doesn't appreciate that their new toy handles differently than a regular car, I can take solace in the fact that they subsidize my purchase of a sensible car!

While we're speculating on increased risk of SUV drivers, could it be that SUV deaths occur in places where normal car deaths simply could not? For example, winter driving over the Cascade Mountains in Oregon is dangerous in an SUV and possibly suicidal in a small car (didn't stop me from doing it a number of times.)

It appears to me that the 'lifestyle' argument consists of irritation at SUV usage (for any particular reason) by city/suburban dwellers. Isn't the answer (which, I admit, is positively un-American) to ban SUV usage in major metropolitan areas?

In any case Brian, the current models of the Honda Accord can't be called "small" anymore. They're certainly mid-sized cars.

Secondly, there's a very good reason why CAFE increases the profit on SUVs, and it's precisely because they're largely exempted from it. CAFE forces cars to be more expensive and less fun. This makes you get less car for your money. Even worse, as you point out, the luxury big cars (non-SUV) are subject to a tax bite in return for not meeting CAFE. SUVs are less subject to the tax that is CAFE, but are a strong subsitute for normal cars.

Therefore, it's clear that CAFE encourages the purchase of SUVs. In addition, their price is naturally going to be similar to the cars with which they're substitutes, the large and luxury cars that pay the CAFE tax. Since they don't pay the CAFE tax, that tax not paid shows up as additional profit to the automobile manufactures.

Kevin is correct, over the long run one would expect the extra SUV profit to disappear. Certainly that would be hastened by the presence of a light truck-only manufacturer. In addition, at the same time one would expect an even further shift of US purchases towards SUVs and light trucks were the price shift to occur.

You left out "use ongoing engine efficiency gains for mileage instead of horsepower."

Easterbrook discusses it here.

"With its focus on the improbables, the supercar project became a reason for not putting into use the fuel-efficiency steps that are practical right now--mainly weight and horsepower reduction. By far the most significant factor in mpg is the mass being moved. Between 1975 and 1988, the average weight of new cars and trucks declined by 800 pounds. This was caused not by a shift to dangerous minicars, which have never represented more than a tiny fraction of the U.S. market, but by trimming excess off full-sized cars and trucks. The result was that during this period the fuel efficiency of U.S. vehicles steadily improved. But beginning around 1990--when CAFE increases were suspended--the typical weight of U.S. vehicles began to rise. Today, with the SUV glut, average new-car weight is almost back to what it was in 1975, when enormous Ford Galaxies and Chevrolet Impalas clogged American driveways."

"To move this ever-increasing weight, engineers have focused on improving power, with the result that today's typical new car boasts 180 horsepower, versus 140 in 1975. In a sense, the internal-combustion engine has grown steadily more efficient; the problem is that the progress has gone toward making vehicles bigger and faster rather than easier on gas. Give up a little weight and horsepower, and a 35-mpg full-sized car or minivan is possible right now, many analysts believe, at market prices. Were such cars widespread, today's oil prices would not be as high. But that's not what Detroit wanted to build--and the supercar project provided the perfect excuse."

“Thanks, Jane. The next time I'm grumbling over an SUV hogging the road, blocking my vision, or being driven by an inept driver who doesn't appreciate that their new toy handles differently than a regular car, I can take solace in the fact that they subsidize my purchase of a sensible car!”

I also sense that those who drive larger vehicles are ruder and more likely to cause an accident. It is my guess that subconsciously they take greater chances knowing that their vehicle is better able to survivor a crash. I have lost count of the number of times a SUV driver has tailgated me. Someone with a large family probably needs a SUV. However, how many people have at least 4-5 children? I’m sorry but my tentative opinion is that SUV owners are mostly arrogant jerks---and indulging in selfish behavior.

Just a few comments. High performance tires have stiffer sidewalls and a LOWER profile. They also tend to be wider and use a softer rubber compound to improve handling.

Mini vans tend to have similar rollover characteristics to SUV's but suffer from far fewer rollovers per 1000 vehicle miles. I suspect that the difference is in how the SUV's are driven. That brings us back to drivers thinking they are safer that in they really are.

I have no problem with SUV's although I have no desire to own one. I believe I am safer in a small "tossable" car that is able to avoid the accident. Avoiding accidents do not show up in the safety numbers. I am not aware of any of the enthusiast magazines (Autoweek, Car & Driver, and others) looking onto the matter but I do not subscribe to them all. I think it would be an interesting subject for such a mag.

Anyone who thinks a Honda Accord is comparably safe as a Suburban is invited to crash test both. The tings is, you'll be required to test the Honda first.

I lost a close friend a few years ago, who swerved off the hilly part of Sepulveda and hit a tree. The driver's side compartment was crushed as was he. I've driven past that spot dozens of times since then wondering what happened. Especially since I was the one who introduced my friend to using Sepulveda as a 405 alternative while he was attending UCLA and coming out to visit me in Castaic. The owner of the house whose lot includes the tree says there has been at least five other almost identical fatal accidents in the decades he's lived there.

If Dan had been driving a Suburban or its like he'd have sheered off the tree, gone through the wall behind it, and into a swimming pool. He would have been at greater risk of drowning than injuries so severe his parents chose cremation.

I've seen and even been in enough automotive mishaps to know that their is no substitute for armor and padding when two egg crates are hurled at one another or a stationary object. On a daily basis SUV drivers walk away from impacts that end in closed casket funerals where the same conditions are applied to a modern small sedan.

I remained utterly uncompelled by the rollover statistics. What is so hard to comprehend about a vehicle's center of gravity? If you drive a truck like a car you're going to get in trouble. Drivers that are too stupid to get this are just evolution in action.

Federal laws could easily mandate a roof strength standard in correlation to the vehicle's gross weight and virtually eliminate the rollover fatality disparity at a swipe. It will not, however, do anything to reduce rollovers, just their consequences. PErsonally I'd rather leave rollbars as options for those who care and let asshole drivers pay the price for their behavior.

As an aside, SUV's aren't the only vehicles that are suffering from bloat -- the new Rolls Royce and Maybach 62 are perfect examples. Each tips the scales at over 5,000 lbs. The Maybach 62 (62 refers to the length of the car: 6.2 meters) is about a foot longer than a Suburban.

The only reason I have an SUV is ground clearance and 4WD. Here in Denver, you can try to get over Loveland Pass with a Honda Civic, but the ones I typically see up there are usually just anonymous snowmounds off to the side of the road where the plow has simply covered up the wrecks.

If the manufacturers were to give more cars a slightly higher clearance and AWD/4WD, I'd probably buy one. As it stands now, my only choice is between a Gen-X Taurus (ie, the Audi A4) and a kid's toy (ie, the Subaru WRX).

People who attribute moral qualities, or even probabilities of moral qualities, to strangers based upon their automobile preference, are the sort of tiresome boors that one absolutely dreads having social interaction with.

Allow me to summarize:

"My anecdotal evidence contradicts the statistics."

"Also, the statistics are wrong."

"Even if the statistics are right, people in SUVs deserve to die."

“The only reason I have an SUV is ground clearance and 4WD. Here in Denver, you can try to get over Loveland Pass with a Honda Civic, but the ones I typically see up there are usually just anonymous snowmounds off to the side of the road where the plow has simply covered up the wrecks.”

You may have a very practical reason for owning a SUV. My criticism is directed solely toward those reasons that don’t pass the smell test. And yes, I argue that many of these folks are arrogant and self centered narcissists. We have every right to guilt trip them during this emergency period in American history.

Mini vans tend to have similar rollover characteristics to SUV's but suffer from far fewer rollovers per 1000 vehicle miles. I suspect that the difference is in how the SUV's are driven. That brings us back to drivers thinking they are safer that in they really are.

This is a fair summary why the "compacts are less safe" argument doesn't hold water in practical terms -- not because of pure physics (by which the compact IS less safe), but because the analysis is completely re-cast when you account for driver demographics.

You may have a very practical reason for owning a SUV. My criticism is directed solely toward those reasons that don’t pass the smell test. And yes, I argue that many of these folks are arrogant and self centered narcissists. We have every right to guilt trip them during this emergency period in American history.

Oh joy, another zealot on a demonization campaign.

I have observed rude drivers operating SUVs, two-stroke street bikes, small cars, large cars, and sometimes even police cars. Let's try the red-light-at-a-bad time theory on for size and see how it fits.

Red lights are 'negative;' when you have to stop for a red light at a bad time, you tend to remember it, hence the perception of "always getting caught at a red light" is reinforced.

So: If you consider an SUV to be, in general, a 'negative,' and you observe a rude driver in an SUV, does it reinforce a perception of "many SUV drivers are arrogant self centered narcissists?"

Yes, David, it's a free country, which means one is free to be a presumptuous, narrow-minded, indulger of various over-generalized, factually lacking, prejudices regarding large groups of people. One is also free to plainly recognize that obnoxious activity for what it is. If it is in the vital national interest to reduce gasoline consumption, then, as many have noted, the best way of doing so is to dramatically raise gasoline taxes. There are trade-offs involved with this, so it is not an open and shut case. Projecting broad generalizations upon the moral quality of extremely large groups of people, based upon something so trivial as which method of conveyance they prefer, however, illuminates nothing. By the way, I have driven nothing but Accords and Camrys since the mid 80s.

David, not sure how legitimate you'd think my owning a 4WD would be if you knew that to most of the reason I need it to get over Loveland Pass is purely recreational. The rest of the time, I'm puttering around suburbia like the rest of us.

As for rude drivers, I'm more aggressive when I'm driving my 255hp sedan than I am driving my 160hp SUV. It's simple, if I'm in the sedan and you're in the left lane, you'd better get out of the way. If I'm in the SUV, I'm so conservative my girlfriend yells at me for driving like grandma.

I also wonder about the whole car-tuning craze. Maybe I'm paranoid, but I suspect some of these companies are purposely designing fuel-efficient, underpowered cars that can be cheaply converted to gas-guzzling pocket rockets, while keeping their high CAFE numbers. Any gearheads out there who can tell me if I'm completely off-base here?

To build on some of the other responses to this question:

When the manufacturers actually want to release a low-cost pocket rocket that already has a turbo and such, they do -- see also the Subaru Impreza WRX, and the forthcoming US incarnation of the Mitsubishi Lancer Evolution. They don't do this too often because it is somewhat harder to meet the CAFE standards while keeping the price in the target range (can be done, but either/or is easier to accomplish).

However, AFAIK the people who add the genuinely high-zoot (i.e. fuel economy reducing) toys in the aftermarket are not THAT numerous as percentage of the market overall. The rice-racer fad tends to lean heavily toward cheaper upgrades such as cosmetics (body kits, wheels, lighting), engine light-tuning (low-restriction intake mods, aftermarket exhaust systems, upgraded plugs, wires, fuel filters, etc.), and suspension modifications.

Once you start playing with notable power-increasing/fuel-economy-reducing devices such as enlarging the cylinders, turbos, NoS, et al you can blow $10-20k without even trying (while also raising your maintenance costs), and the folks who do this buy the smaller cars they like, not all of which are especially cheap. Popular modding models include, but are not limited to: Civic, Accord, Prelude, Integra, Jetta, Eclipse, Corolla, Supra, Focus, PT Cruiser...Often some model years are more popular than others so modders will sometimes seek out previously owned vehilces as opposed to buying new, anyway.

For example, after Honda announced that it was replacing the widely-loved Acura Integra with the new Acura RSX, Integras became a lot more scarce in the used car market.

> You may have a very practical reason for owning a SUV. My criticism is directed solely toward those reasons that don’t pass the smell test.

And you know why owns their car because, umm. Help me out here - how do you know? Do you read minds? (No, I'm not going to accept "I see folks" or "I saw it on TV.")

Please remind me why should we give your smell test any consideration at all? Aren't we better off using its existence to brand you as an undesirable?

Oh, by the way - why haven't we seen a push on the right to replace CAFE with gasoline taxes?

dt.. i'm disappointed in you.. you normally ave your head on.. now you're being an oppressive twit...

the main reason suvs exist is cafe... the subarus hondas etc count as trucks, so they don't screw over the company...

esaterbrook may like underpowered euro cars.. but that's unamerican, and not very useful for the type of driving in north america (much more common to do long trips and moves...)

i'll only drive suvs, as they are a godsend in bad weather, amazing to move with, can carry anything and go anywhere... they're cheaper than having a sports car and a pickup

are they dangerous if handled improperly... hell yeah, and when i was really young and really stupid i got into some interesting spots... course the worst things i've seen/heard of driving has been done in cars

physically, suvs are better cars, but as mentioned, driver selection gets more risk taking in suvs, so you don't see the benefits as much

cafe and gas taxes are bad.. privatise roads and eliminate gas taxes.. cars are about freedom, rather than some conservative/socialist statist/stasist control...

get rid of cafe, you'll have many fewer suvs (station wagons have been essentially eliminated by cafe)

this is yet another situation of government regs having counterintended results... yeah government

as for why prices are so much higher...

positional good... but also, there's much more competition now, so prices are likely to drop (and are in fact dropping with intro of import models), but autos are long leaad time industry,
so only seeing these effects now

also... how cool are the ranger rover/x5 4.6is/porsche cayenne turbo??? SWEET CARS

too bad you can't get the 4.6 engine in the range, as the x5 isn't a real suv... though porsche claims that theirs is (and they've done very bad things to/with 911s so must trust them)

if you can convince someone that they should trade their 40k car in for a 150k car... well you're going to make a bit of money

Jane -- According to a 1990's Consumer Reports article on government and insurance industry crash test data, whose exact date I forget, car safety depends more on design quality than size. On average, larger vehicles are safer than than smaller ones, but this is not always the case. There were some light trucks with horrible crash test results. I don't know about today.
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Large vehicles with high bumpers make the roads less safe for compact and mid-size cars. It would be nice to put an carefully-determined "safety tax" on SUVs to compensate for making the roads less safe. I don't mean to ban SUVs, just compensate for the safety externalities they impose on others.
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Profits tend to be high when there is little competition. Low competition can come from competitor incompetence or high barriers to entry.
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Japanese and European automobile manufacturers were slow to recognize the profitability of SUVs because such large, expensive, low-mileage vehicles are not in high demand in their countries, perhaps because of the confined streets, tough gasoline-pollution standards, recently-struggling economies, and less-macho cultures. The Europeans developed more diesel vehicles because of their lower diesel-pollution standards. The Japanese put little effort into light trucks, producing expensive, underpowered pickups like the Toyota T100. After the Reagan Administration imposed a quota on Japanese cars, Honda, Toyota, and Nissan invested heavily in their new Acura, Lexus, and Infiniti divisions, respectively, to make high-profit, low-quantity vehicles at the expense of Cadillac, Mercedes-Benz, and BMW. Lexus is now the most commonly-sold luxury car maker in the U.S. The Japanese manufacturers did not realize that SUVs would be high-profit, high-quantity vehicles. According to a business case study anecdote I read, Japanese car executives from a major manufacturer didn't realize that many Americans use their pickups as basic transportation until executives from the manufacturer's American subsidiary took them to see the parking lot at a Dallas Cowboys football game. Meanwhile, Chrysler, which needed a $1.2 billion U.S. government loan to stay afloat in the early 80's, had turned their Dodge Caravan minivan and Jeep Cherokee/Grand Cherokee SUVs into money-spinners. Ford turned their Bronco II into the Ford Explorer, the best-selling SUV in America. General Motors struggled selling Cadillacs and Oldsmobiles, but survived on their GM/Chevrolet Suburbans.
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According to Consumer Reports, tariffs on Japanese light trucks were extremely high relative to that on cars, creating a high barrier to entry in the American SUV market. I don't know how high current tariffs on light trucks are, but they were 25% on Japanese trucks in the late 1980s. The original SUVs were made with the body-on-chassis contruction of pickups, so foreign car manufacturers, who were focused on the stronger, cheaper unibody construction of cars, struggled to change production. In the 1990's, Consumer Reports said that the early Toyota Tacoma pickup and Honda Passport SUV, a rebadged Isuzu, were the only lousy Toyota and Honda nameplates. European and Japanese competition in the SUV arena is greater now, but once consumers are accustomed to paying a premium for SUVs, Japanese and European manufacturers know that they can collude with American manufacturers to keep SUV prices high. This collusion, if it exists, did not arrive without the original tariff barrier to help it, though.
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Compact cars are a not necessarily loss leaders. According to Businessweek, Toyota, Honda, and Nissan have been making money off of their compact cars despite the higher cost of making a lot of different kinds for their domestic market. Volkswagen, which didn't have a SUV until the recently introduced Toureg, has been making money on their Passats and Golfs.
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To see the effects of the light truck tariffs, note the last few lines of this article from http://www.japanlaw.com/lawletter/july84/cvg.htm.

7/84 AUTO TRADE

Canada and Japan have reached agreement on Japanese auto shipments for the year running from March 31, 1984. The Japanese will be permitted to export 166,000 cars to Canada which may be increased to 170,000 if the Canadian auto market proves particularly strong. In the previous year Japan's auto exports were limited to 153,000.

Nissan has decided that from the spring of 1985 it will start producing passenger cars at its US plants, running on the level of about 100,000 per year. This will be the second Japanese auto firm to produce in the US, following Honda. It will procure 50% of the parts from the US market. The cars will be sold in the Eastern part of the US.

Much hullabaloo has been raised about the recovery of auto sales pumping up auto company profits. Yet it appears that this is not the case. The recovery has been led by truck sales. While auto sales fell from a peak of 9 million in 1978 to a bottom of 5.76 million in 1982, in that same year, 1982, truck sales increased by 300,000 units. Even in the first 4 months of 1984 Ford alone sold 382,000 trucks, a 33% increase over the same period a year earlier. The company's F Series pickup has become the best-selling vehicle in the US. In the same period GM sold 480,000 trucks compared to 376,000 a year earlier while Chrysler sold 177,000 compared to 85,000 in 1983. About 90% of this is in the light, half-ton trucks. Notably, in mid-1980 the US increased tariffs on Japanese light truck imports from 4% to 25%. At that time Japan was selling 500,000 vehicles per year in the US. Due to the imposition of these tariffs, Japanese truck exports soon plummeted by 29%.

THE JAPAN LAWLETTER. July 1984. By Roderick Seeman

Well, maybe my pickup isn't as safe as the sedan I traded it in for. But since one of the main reasons I bought it was to haul around my motorcycle, I guess safety is not uppermost on my mind, anyway...

M. Rackham,

SUV drivers already pay such a tax in the form of high insurance rates. The stupid ones with a history of screwing up (but not dying of it) pay still more.

I cannot accept any proposal for fining people for 'potential crimes.'

I can't speak for "the right," but I agree with Virginia Postrel and (I think) Jane in believing that while increased gas taxes combined with a concommitant reduction in, say, the income tax would be preferable to CAFE, just getting rid of CAFE would be better still.

cafe and gas taxes are bad.. privatise roads and eliminate gas taxes.. cars are about freedom, rather than some conservative/socialist statist/stasist control...

Ugh...I've driven through Chicago a couple times. I suppose RF-activated window scanners, which register the toll through credit card at highway speed, are one way to get around the stop-n-go problem. (They offer the use of them on Denver's E470 bypass tollway.)

But how do you deal with the issue of having a single private provider control a section of an essential infrastructure resource, a resource which in some areas doesn't well lend itself to duplication? How do you regulate the fee structure?

How do you deal with smaller roadways that are not bounded in (and hence are the responsibility of) a municipality, yet have many entrances and exits -- do you put a toll every possible access point? Or, if you privatize only major highways, how do you deal with the problem of some people opting to take (and clog) free smaller routes that get to the same destination? They may be longer in some cases, but if the gas just got a lot cheaper...

And how do you get significant amounts of new highway installed when the necessary land acquisition typically requires government-level intervention?

All of this is a little off-topic of course, but I think in those few simple lines of commentary you're proposing a fantastic mess.

I've been driving SUVs for ten years. I bought the first one by accident. I was looking for a station wagon but, (stop me if you've heard this one) CAFE rules made that futile. The next best choice was a truck with a wagon body, otherwise known as an SUV. Both of mine have been Nissan 4WD Pathfinders.

Here is another bit of economics that hasn't been discussed: Small cars wear out faster than big cars.

Fred - why do small cars wear out faster than big cars? That's not immediately obvious to me.

no need to sell all the roads to one owner... can compete by routes....

private companies have and do build railways and subways, which are higher investments than roads

ezpass transponder system works well... as apparently does the london system (costs money to drive acros a set boundary)

there are a variety of ways of collecting these things, outside of gps tracking (which is overly intrusive imho)

the current system is a monopoly taht controls access... but its based on time and quality rationing, rather than price... cash based rationing improves economic efficiency (time = money), encourages efficient usage of resources (gas, carpooling, public transit), and allows for more investment in upkeep and development (rather than general revs pot o money that gets spent in some pols backyard)

Libertarian: Okay, fair enough, I see where you're coming from; although I remain skeptical as to whether the politics would make this impossible.

Dylan: I can think of a few reasons off-hand --

1. Thermal cycling. Large cars tend to have larger engines, which in city driving cool less during short stops; a small car engine will cool quicker and thus, on average, possibly undergo greater mechanical strain from thermal cycling.

2. Drivetrain and suspension tolerance. If something moves or rubs or whatever repetitively, it will wear; but smaller parts will wear at a disproportionately greater rate than larger ones, even though the larger one may be taking up more stress due to torque/power/whatever. (You can illustrate this theory at home by purchasing two of the same power tool, except buy one cheapie and one heavy-duty version, and see what kind of mileage you get from each.)

3. General quality of construction. Bigger cars tend to budget more money for general structural integrity and reduced NVH (noise, vibration, and harshness), and either way have more mass, which results in less mechanically-destructive vibration. Bigger, more expensive cars also tend to use somewhat thicker sheet metal, things like that.

4. Demographics -- (a) Owner income level and/or (b) owner perceived value. If small, inexpensive cars are more likely to be (a) held by lower-income owners, the odds are good that the car will receive less regular maintenance; same may also apply if (b) the car's lower cost influences an affluent owner to not take very good care of it, both in general maintenance or poor driving behavior (the 'disposable razor theory' if you will).

"SUV drivers already pay such a tax in the form of high insurance rates."

They don't, actually.

"Insurance-company data, Bradsher writes, show that SUVs and light pickups have much higher loss rates than regular cars. That SUV owners generally do not pay higher insurance premiums is a perverse consequence of 1970s-era laws that discouraged insurers from linking auto premiums to vehicle weights. Those laws were enacted when the well-off had glistening new small cars and the poor had old land yachts; in the era of the SUV, they represent a subsidy from the poor to the well-off. Buyers of luxury SUVs may also get tax breaks denied to buyers of regular cars. As the Detroit News recently reported, the Internal Revenue Service has been allowing affluent business owners who buy SUVs and classify them as business "trucks"--even if they are actually burlwood-trimmed Cadillacs for personal use--to knock as much as $25,000 off their taxes through a special depreciation. The special tax break only applies if the SUV weighs more than 6,000 pounds, which represents still another reward for waste."

If small cars actually do wear out faster than large cars (which I think is an extremely tenous claim), you'd kind of assume that would be factored into the price to the point that there's no "longevity" gain from buying a large car.

You are correct, Michael. Higher performance tires are low profile. Silly error, there.

I'm guessing that it's possible that small cars wear out more quickly. However, I've seen a lot of Hondas and Nissans with well over 150k miles on them, and not all that many Suburbans. Maybe it's the people I hang out with; I realize that anecdotes are not anecdata.

Older vehicles (before they started shaving weight) are bulletproof in some regards and absolutely abysmal in others. My 1968 Ford F250 has an unknown number of miles on it (5-digit odometer; no idea how many times it's rolled over), has never had any engine work done, has the original carbueretor and until recently had the original shock absorbers, radiator and probably radiator hoses. Older engines were overbuilt, but were built simply. You had to adjust valve lash on a rather frequent basis, and you also had to adjust distributor point gap and dwell. They were high-maintenance, but could take a huge amount of abuse and continue running. The engine is a cast-iron block 300 cubic inch six-cylinder, pulling air through intake runners of wildly varying lengths (this is not a good thing) through a single two-barrel carbueretor. The main bearing caps are probably five pounds apiece. All of the oil seals are paper and most of the covers that have oil seals leak.

Newer engines have breakerless ignition (some of them don't even have a mechanical distributor at all; they have a crank angle sensor) and self-adjusting valves. They require minimal maintenance. I'm still on my original fuel injectors after 150k miles; my '73 Volvo injectors crapped out after less than 100k.

Lighter, however, is not necessarily better. What's better, saving a few thousand dollars over the life of your car, or having enough structure around you that your probability of surviving low-speed collisions is markedly improved? There's only so much you can reduce weight before you start guaranteeing reduced survivability. My Volvo only weighed about 2300 lbs, but it was nearly all in the sheet metal. I doubt you could make it much lighter without also making it a lot less durable.

There are other things out there that can hurt you besides high-bumper SUVs.

Which part of the parking space sign "Compact cars only" do SUV drivers not understand?

For the record, I drive a car, not an SUV, though it is a full-size Crown Victoria.

Several people have responded to the comment about "SUV drivers" in general, so I'll only not that given how many SUVs sell, it's silly to make a generalization about that large of a group of people.

Here's an anecdote. Before SUV's, my dad drove a full-sized fan. I'm talking about a fifteen-seat 1-ton Chevy van. He drove it to work every day. Obviously, he didn't need it to drive to work. Nor did he need it to drive two kids to school. What he did use it for, though, was buying lumber and such for working on our house (he extensively remodeled it over many years) and hauling large groups of kids to parties, sports events, etc... We could fit whole soccer or softball teams in the van. I suppose we could have had an extra car, but we weren't exactly swimming in money when I was a kid and the van was cheap (simple, no-frills).

Also, does anyone happen to know how much pollution is generated by building a car? Many people who drive SUV's or other trucks only need it sometimes. But having a second car around would generate a lot of pollution just in manufacture (and disposal) as well as cost a lot (in purchase, insurance, and registration). Now that cars are so small, trucks are often the only option when it comes to hauling people or materials.

Oh, and the part about "compact car parking only" that I don't understand is the part about where I'm supposed to park when there isn't enough parking for larger cars. I try to park in larger spaces, but too many places seem to be working under the delusion that everyone drives a compact car and they don't need to provide any full-sized spaces.

Bolie IV

"In order to make up the money they're losing on the compact and sub-compact market, the automakers jack up the rates on the rest of us. Especially in the most price-insensitive part of the market: the SUV owners."

So you're claiming that if CAFE were removed, so car companies were no longer forced to sell little tin boxes, they would generously lower SUV prices? I don't see why. If they can get, say, $35,000, for an SUV they're not going to sell it for $30,000, whether they're losing money or making it in the subcompact segment.

I just **LOVE** how the Arianna Huffingtons of the world fly on private jets to speak about the evils of SUVs....

No, that's not what I'm saying at all. I'm saying that if CAFE is enforced on SUV's, the price of compact cars will go up, unless they're averaged in as part of the fleet, in which case you'll see a net rise in carbon emissions as people who couldn't afford cars get them at subsidized rate for the offset.

I do think that if CAFE were removed, the price of SUV's would fall, but not because automakers are generous; rather, I think removing CAFE on other cars would reduce demand for SUV's, causing the price to fall.

Dylan, small cars wear out faster, well, because they're smaller.

I've owned cars with 13 inch wheels and little four cylinder engines. Little tires wear out faster than tires on 15 inch wheels and little engines wear out faster than V-6 or V-8 engines.

I bought a Ford Escort new and threw it away worn out at 115,000 miles. My first Pathfinder had 174,000 miles when I traded it in for my second Pathfinder which now has 116,000 miles and ain't even half worn out.

I drive an expensive SUV becuse I can't afford a cheap car. There ia a premium to pay for operating a small car. For example, tires for 13 inch rims are cheaper than tires for 15 inch rims but, having less rubber, they wear out a whole lot sooner. Net cost is higher.

Fred:

Hmmm...I'm not sure how an 80,000 mile tire is going to get more miles on an SUV than on an econobox. Although I don't dismiss what you say out of hand, the idea that things wear out faster because they're smaller doesn't exactly prop itself up.

I've got a Nissan Sentra that would have a whole lot more miles than 155k on it if I actually used it for anything other than the drive to and from work. My mom drove a Honda that looked and ran practically like new with 250k miles on it. I think that for either of us to make a thesis out of anecdote, we'd have to provide some wide-sample data.

Good discussion. Superb reading on this site.

Well, mostly good discussion, anyway.--I think the premise that large high-profit SUV's keep the price of small sedans down is based on a business model which simply has no basis in reality. Each manufacturer produces a product line---typically several models based on a single platform---based on projections of profits which can be gleaned from that model alone.

Put another way: Ford does not set the price of it's Taurus, Focus, or Mustang models based on profits from sales of Excursions and Explorers. These models have to pay for themselves.

The reason manufacturers maintain high profit margins on SUV's is....because they can.

Moreover, it is entirely within Detroit's means to produce a roomy SUV with a engine of adequate power output which does not guzzle fuel. The reason they don't is because they do not have to---and as long as consumers are flocking to buy the giant road hogs then Detroit will be only too happy to sell them.

We should end the "light truck" exemption from CAFE standards, and terminate the ridiculous tax write off for the most giagantic ones (this law was written to help farmers and small business owners with the cost of new equipment--who knew back then that people would buy 3-ton leather-lined luxo-barges?).

As for raising the gasoline tax and user fees and toll roads: These measures would be in effect a regressive tax, taking a higher proportion of income from those least able to pay. No, thanks. We pay too much in fuel taxes already, and I do not see why we should emulate Europe in this regard.

As for some of the rest of the comments: There is no evidence to indicate that "large cars last longer than small ones". It is a function of how hard the vehcile is used and how well it is maintained. My 1971 MGB is still running just fine, as is the 1985 BMW, thank-you very much.

Safety--well there's no denying the physics of large-vehicle versus small vehicle impacts. All the more reason to get the giant road pigs outta my way. I 'spose one could argue that we should ALL be in 5000 lb steel tanks, but I think the opposite course would be better. To quote Colin Chapman (founder of the Lotus Car Company and something of a genius designer himself): "To improve vehicle performance, first add lightness".

Still waiting for the "let the market decide" arguement and accompanying logic. Puzzled that I haven't seen it yet, here of all places.

Cheers.

I have the 4 kids plus the dog, we drive the minivan - so we are out there and we are looking at big SUV so we can more easily haul a pop up tent trailer so we can vacation. I also have a jeep wrangler becuase I always wanted one. It clearly states that it does not handle like a car so don't drive it like one. So again the roll over problem really is a function of driver error rather than un safe car. I have seen quite a few little sports cars zipping down the highway at a high rate of speed, weaving in and out of traffic - unsafe drivers are unsafe drivers. I think its safe to say the gov't regulations always have unitended side effects - the CAFE standards have trade offs, everything does. I am just stunned that a low end SUV goes for the approx half the price of my Twin outside of Philadelphia.

dblclutch -- that would be true if it weren't for the regulatory economics. As it is, I don't think anyone questions that the automakers sell the compact and sub-compact models below cost to keep within the CAFE rules.

A clarification or two:

SUV's do not make up 50%+ of new car sales, that figure is for all light trucks, a.k.a. LTV's (Trucks, Minivans and SUV's). SUV's account for approximately 25% of new vehicle sales, and are about 13% of the total US fleet of vehicles.

Cars and LTV's have separate CAFE guidelines, 28.5 mpg and 20.7 mpg respectively. LTV's are exempted from gas guzzler taxes.

According to NHTSA, deaths from rollover accidents account for 2.5% of all motor vehicle fatalities, and 75% of those killed in rollover accidents were not wearing seatbelts.

Feel free to join us over at Edmunds.com Town Hall. The topic is "I don't like SUV's, why do you?" We’ve just passed the 30,000 post milestone, and are very close to reaching an agreement. Not.

A couple comments.

All these comparisons are on the basis of fatalities per million vehicels in the US

Doesn't that comparison bias against SUV's, which have a higher passenger threshold? That is, there aren't as many "passenger slots" in 1M civics as in 1M Explorers, so there are less potential fatalities to begin with.

secondly, on innovation and R&D:

There is a hard physical limit on fuel efficiency. with the IC engine. I remember doing calcs on it in various physics classes, and there's a page doing the numbers here. For a 1000kg car, he puts the limit in the ballpark of 40 mpg. For the record, I think the curb weight of a Civic is somewhere in the neighborhood of 3000 lbs. The numbers are somewhat off-the-cuff, but I doubt the margin for error is 500%.

The problem with CAFE is that CAFE -- IS --the problem. Cafe was the government's solution to the fuel shortages of the seventies -- and the realization that we as a nation were vulnerable to OPEC. The simplest solution would have been (as Brian suggested) to impose a hefty tax on gasoline, such as most other countries already do.

OBTW, this is my biggest gripe about Nixon -- he opted for rationing and price controls rather than market solutions -- and he was supposed to be a CONSERVATIVE!!! Instead we got yet another government bureaucracy to regulate our lives. Gas was 35 cents a gallon in 1972. If Nixon had imposed a 50 cent/gallon emergency federal tax on gasoline, he'd have broken OPEC's back (greatly reduced demand). Instead, prices went far higher and continued to rise until Reagan decontrolled gas prices.

In fairness, there was considerable public opposition to increased fuel taxes (residents of some states are more dependent on cars). And, folks ARE mistrusting of taxes. But, nearly thirty years later, we're still stuck with this stupidity. We have morons like Robert F. Kennedy Jr. telling Detroit how to design their cars! Tell me, where was Bobby Jr. trained in automotive engineering?

Jane, you're an economist. Surely you'd agree that a revenue neutral federal tax on automotive fuels (cut the income tax to compensate) would be a much, much better way to reduce our dependency on imported fuels than letting Congress design automobiles.

Norman Rogers

"Tell me, where was Bobby Jr. trained in automotive engineering?"

He may have learned something about cars from Ted.

Oops, should note that that number is obviously the mpg for a gas-powered IC engine. He mentions hybrids as one form of increasing effiency. Also, I only did a quick run through on his numbers. I might do a more in-depth analysis if the physics geek in me overpowers my natural laziness.

“Still waiting for the "let the market decide" arguement and accompanying logic. Puzzled that I haven't seen it yet, here of all places. “

Letting the market decide can never be an absolute value. More often than not, it’s valid---but not always. However, I am not advocating that SUVs be made illegal. I merely believe Americans should be guilt tripped into thinking twice before purchasing such a vehicle. Do you really need to buy a gas guzzling SUV during wartime?

If you believe that the reason SUV prices are high is that auto makers "jack up" the price to compensate for losses on subcompacts, then you must believe eliminating the losses - by dropping CAFE - would cause auto makers to lower SUV prices.

Of course, that's not the reason. The reason SUV prices are high is supply and demand, as many here have pointed out. But then would removing CAFE lower SUV prices by reducing demand? I don't see why. How would eliminating CAFE create vehicles not now available that would substitute for SUV's?

Norman Rogers -- Gas tax hikes are VERY politically difficult, in part because our economic activity is so dependent on truck shipping. Raise fuel prices across the board, and you will even see the effects in places as obscure as Wal-Mart, the supermarket, McDonalds...

If you try and do what they did in Europe, i.e. tax gasoline and diesel differently , then you just end up with a bias toward diesel-powered cars, which reportedly stink once you get enough of them in one place.

Large station wagons, which have been pretty much regulated out of existance, for starters. Sedans with more cargo room. Sports cars that currently aren't efficient enough. All are close substitutes for SUVs for cetain market segments, but they're not viable right now because they're covered under CAFE and SUV's aren't.

So far as I know, the 25-percent tariff on imported trucks is still in effect, which is a major incentive for Toyota and Nissan to build their trucks here. Smaller automakers were squeezed out: Mazda tapped corporate aunt Ford to build Mazda-branded trucks for North America, rather than build its own, and Mitsubishi withdrew from the truck market entirely.

Incidentally, SUVs don't meet the definition of "truck" for the purpose of assessing this tariff.

Anony-mouse says, “Gas tax hikes are VERY politically difficult, in part because our economic activity is so dependent on truck shipping. Raise fuel prices across the board, and you will even see the effects in places as obscure as Wal-Mart, the supermarket, McDonalds...

If you try and do what they did in Europe, i.e. tax gasoline and diesel differently, then you just end up with a bias toward diesel-powered cars, which reportedly stink once you get enough of them in one place.”

Good governance IS hard … hard to envision, hard to enact, and hardest to adapt to changing conditions. Ergo, the best laws and regulations are the simplest. We’ve gotten along for a very long time with a very, very short and tersely written Constitution.

This putative tax on automotive fuels could have (should have) been ameliorated (offset) by tax credits or any other means to keep it revenue neutral. And it would have been a whole lot better than putting Congress in charge of designing automobiles.

And, I would have taxed automotive FUELS, not just gasoline.

Norman Rogers

Strange, Ms. McArdle, how your comments section can get so large, yet still leave fundamental arguments explored. Permit me, a simple man to submit such arguments to your readers for their keen-sighted analysis.

I humbly submit:

The mysterious and elusive perceived value of SUV's is readily grasped when you understand what SUV stands for:
Sport (that is, fun and enjoyable)
Utility (useful)
Vehicle.

Thus, we have a vehicle that is both fun and useful. Perhaps if fuel-stingy vehicles were made more fun, useful, or both, potential SUV drivers would consider those vehicles as alternatives. Those who disapprove of SUVs may find that this approach works better than guilt trips or government regulation.

Further omissions in the argument department:

--Statistics of SUV safety vs. Minivan safety: Do they consider that death might be more attractive to a minivan driver, especially one who has carpool duty?

--How does the car-buying logic used by the detail-oriented analysts in the comments section of janegalt.net compare to the car-buying logic used by the general car-buying population? Could this account for the fact that the former are in the comments section of janegalt.com, while the latter are out driving their cars?

--Given a car with a good safety record, or a car that is useful, enjoyable and fun to drive, which one would you prefer to have? Which one would your desired partner prefer to be seen in, assuming your desired partner would be seen with you at all?

--Pickup trucks are picked on not at all by those who disdain SUVs. Yet should the majestic SUV be brought under the reign of Federal Regulation, what will happen to pickups? Will SUV drivers eye pickup trucks as alternatives? We have seen the SUV evolve into a jacked-up minivan. Will the noble pick-up truck turn into jacked-up minivans with a postage-sized bed tacked on?

How does the car-buying logic used by the detail-oriented analysts in the comments section of janegalt.net compare to the car-buying logic used by the general car-buying population? Could this account for the fact that the former are in the comments section of janegalt.com, while the latter are out driving their cars?

Touché! I drive (and enjoy) an '88 Corolla GTS that gets about 30-35mpg on the highway. My dad drives an '85 Toyota 4Runner (which he DOES use for 4WD recreation now and then) about 75 miles a day at

The analyses here, however, are not necessarily limited to the persons here. Behavior patterns among people who do not care WHY they are behaving a particular way still tend to fall into predictable patterns, which can then be modeled by the type of people who harbor sufficient interest in creating and analyzing those models. Quite a bit of that type of analysis seems to be taking place so...

Beth,

Most fatalities in SUV collisions occur during rollovers, and then only when occupants are ejected from the vehicle - this only happens when the occupants ARE NOT WEARING SEATBELTS. If you are wearing a seatbelt, SUVs are far safer than eco-sensitive death boxes. Personally, I view this as Darwinism in action.

You passed up a Cordoba? One with fine Corinthian leather? Were you mad?

Jane, in your post you claim bigger vehicles are safer than compacts - have you got any stats to back that up? Can you post them please if you do?

Some points:

- smaller cars are lighter and hit with less force than heavier vehicles. Force is not solely velocity dependent. Force = mass x acceleration. Mass matters.

- smaller cars are easier to control, generally, therefore less likely to get into accidents.

I don't know if these factors overcome the superior structural integrity of larger vehicles, I suspect they do but I have no stats to back up my gut feeling.

Cheers.

Having found this forum during a search for another paper concerning SUVs - this one being on reducing the CAFE standards to passenger car levels, I found plenty of good and sometimes frustrating reading to be had. Regarding SUV safety, statistics show that SUV passengers are 6-8% more likely to be killed than in a passenger car. Rollovers kill because SUVs tend to roll and they do not have roll cages or are sufficiently reinforced. They do however weigh many tons and basic physics and gravity will crush their thin roofs easily. Physics also prove that they cannot stop as fast, are less maneuverable and are no better on snow, ice or any slippery surface than a comparable AWD/4WD/ETS passenger car. Studies have shown that 2WD is sufficient in all but 5-10% of all driving conditions and that driver skill is generally the most contributing factor. I would bet that I could get through a wet slalom course faster and safer in my BMW than in an Excursion. You are only safer in an SUV if you hit a smaller car and only if you don't roll. That's great for you, but not so nice for myself and my three children that get crushed into paste. Thanks a lot. I guess it's okay if you kill me as long as you're safe. What are you going to do if someone gets a bigger SUV than you? Arms races aren't good for anyone - ask the Soviets. Bottom line is that all I and many others ask is buy a vehicle that is pracical and responsible. If you are so pathetic and worried about your image that you have to have an H2 to feel like a man and pick up women, then you have someserious issues you need to deal with. If you have a boat, camper or horse trailer that is heavy enough that it warrents a larger SUV, then buy one. Otherwise, get a car and save the money and possibly your life and the lives of others. BTW, I am 6'3", 235# and have just as much leg room in my BMW 3-series than in my girlfriends Four-Runner so that won't work either. And there are still the fuel economy, emissions and cost factors to discuss...

Hi, I'm new and skimmed previous comments so please excuse me if someone's already raised these points. An excellent reference on SUVs is "High and Mighty, SUVs: the world's most dangerous vehicles and how they got that way" by Keith Bradsher, the Detroit bureau chief of the New York Times. The title's a bit sensationalistic but the book is pretty balanced, well written etc.

As to why SUVs are so profitable, he points out several factors. 25% import duties on foreign-made light trucks, enacted in the 60s to balance out a trade deficit with...West German chicken farmers! Light trucks were also exempted from the fuel economy and pollution standards for autos partly on the assumption that their original users--tradesmen and farmers--couldn't take the burden and needed big vehicles for work. Also, American Motors at the time was on the ropes and lobbied for exemptions in order to stay in business making Jeeps. There's a lot more info but it basically centers on a lot of different factors that created a gap between what americans said they (others) should drive and what they really wanted to drive--small, high-milage, zero-emission cars or fun gashogs with the appearance of safety for occupants and menace for others.

SUVs are so profitable in the short term that the Ford plant that built Lincoln Navigators and Ford Expeditions was/may still be the single most profitable factory in the world.

Pick-up trucks are uniquely american. The number two market for them is Thailand. The big SUVs are built on pickup chassis with a lot of shared hardware so deveolpment costs stay low--and their construction method of bolt-on chassis has until recently been that of cars from the 50s rather than the safer but more expensive unitized or uni-body construction that allows for crumple zones in crashes. Thus SUVs became a protected profit item for U.S. manufacturers, which made for less competition on price.

There's much more in the book (I'm only halfway through it) on safety, the psychology of SUV owners/marketers, even Schwarzeneggar's 'contributions' to the industry championing the Hummer. Check it out of your local library or look for it at Amazon etc.

P.S. If anyone has info on the demographics or psychographics of car/truck owners let me know.

Mark Martel

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