Filed under: MPG, Legislation and Policy
DaimlerChrysler gets record $30M CAFE fine
When Corporate Average Fuel Economy regulations were instituted by the US Congress in the mid-seventies, the law included fines for automakers who failed to meet the standard. The first company to fall prey to CAFE fines was Jaguar in 1983 when they paid $57,970 to the National Highway Traffic Safety Administration (NHTSA). NHTSA is the agency that actually sets the rules for CAFE, calculates the averages and administers the fines. Over the years, carmakers have been fined a total of $735,422,635.50 for selling cars and trucks that use too much fuel. NHTSA has just released the latest list of fines including those for the 2006 model year. DaimlerChrysler got a record fine of $30,257,920 for that model year almost double the $16,895,472 they paid the previous year. The previous record went to BMW in 2001 when they paid almost $28 million. As the new standards increase over the next decade, companies that produce a lot of high performance cars like Mercedes and BMW will likely be paying a lot more in fines unless they start selling a lot of hybrids and diesels.
[Source: NHTSA]
Reader Comments (Page 1 of 1)
sensitive_man 10:20AM (12/30/2007)
1. So where does that money go? It would be nice if they money was required to go to development of more efficient vehicles.
2. Do they actually pay the fine? I know here in Louisiana a lot chemical companies are fined for environmental issues but the State never bothers to actually ask for the money.
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Kardax 10:42AM (12/30/2007)
Those fines don't seem that severe to me. Assuming the government collects them, they'll be folded into the price of the vehicles.
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jcwinnie 11:21AM (12/30/2007)
What money? What Chrysler? The Washington Theater group is getting too surreal for me.
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Tim 11:56AM (12/30/2007)
Kardax is correct and "...they'll (fines) be folded into the price of the vehicles."
We the consumer/taxpayer ALWAYS pay and pay and then pay some more.
sensitive_man has the MOST important question...
"... where does that money go?"
Who benefits from OUR labor???? NOT US!!!
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susan.kraemer 12:53PM (12/30/2007)
We're in luck, sensitiveman:
indeed that is just where the fines WILL go in our new 2007 CAFE bill. I had the same thought as you, and so I combed through the final signed bill:
"Sec. 112. Use of civil penalties for research and development:
Use of Civil Penalties- For fiscal year 2008 and each fiscal year thereafter, from the total amount deposited in the general fund of the Treasury during the preceding fiscal year from fines, penalties, and other funds obtained through enforcement actions conducted pursuant to this section...
half goes to blah, blah, blah, the other half goes to...:
...shall be used by the Secretary to carry out a program to make grants to manufacturers for retooling, reequipping, or expanding existing manufacturing facilities in the United States to produce advanced technology vehicles and components.
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GoodCheer 2:08PM (12/30/2007)
Thanks for that research susan.kraemer.
I wonder how "the Secretary" will allot funding. If it were evenly distributed between all manufacturers it would certainly benefit the likes of Tesla, but it might well be preferentially siphoned back to the companies from which it was collected.
In any event, I think Tim can rest easy that it will only cost "the consumers" more if they choose to buy the products made by those companies who pay those fines. It turns into a demand-side disincentive that increases the retail cost of vehicles from low-MPG manufacturers while possibly lowering the cost of high-MPG vehicles (if CAFE-compliant companies get some of those grants from the Secretary).
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Dave 4:35PM (12/30/2007)
I'd like to know how much the fines would be if CAFE were 35 mpg today.
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Guenther 12:27PM (12/31/2007)
Tim,
If you're so offended by the thought of buying a vehicle that carries a gas guzzler tax right on the sticker- DON'T BUY IT. Geez- we all like to piss and moan about getting taxed, but THIS tax is completely optional.
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enoch 1:29PM (1/01/2008)
The company treates this just as the cost of doing business (like any other tax). In addition to the CAFE standards, there should be a hard cap for mpg.
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Hummer subsidizing Prius 11:59AM (3/15/2009)
"Those fines don't seem that severe to me. Assuming the government collects them, they'll be folded into the price of the vehicles."
Sure, the higher prices of fuel efficient vehicles. I'm tired of subsidising welfare Hummers with the low gas prices caused by my Prius.
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