In the fall of 2007, when the U.S. economy first seemed in peril, I began answering reader queries here on the Business Desk. I still do so, but this page has expanded to include posts from eminent economists, "far-flung correspondents," and a variety of voices that have intriguing and/or useful things to say about economics, broadly defined. Please feel encouraged to respond to any and all of them.
Why can't the U.K.'s fuel efficient vehicles be sold in the U.S.?
City & State:
Question/Comment: Car companies such as Ford, GM and Toyota sell cars throughout the world. In examining the U.K. Web sites for these companies, even in cases where the car model is the same as the U.S. model, the U.K. model always seems to have significantly better fuel economy ratings. It appears that those UK versions have generally smaller engines, and many are powered by diesels. Given the recent increases in fuel costs, what are the barriers that prevent these more-efficient vehicles from being sold in the U.S.?
Paul Solman: Good question. There are several answers. One is the emission regulations in the U.S., which precludes many of the European diesels from being sent here. Another is the capacity to make the engines. This is also true of the smaller gasoline engines. Engine plants take a fair amount of time to convert from one engine to another and to launch a new engine. The high price of diesel fuel is also a problem because it is in shorter supply than gasoline, and it is difficult to convert the refineries to make it. There are significant tax incentives on diesel engines and fuel in Europe. It now takes about 2 years (compared to about 5 years just a few years back) to design and tool a new car, but the market can move much more quickly as we have seen in recent months. You will see more European cars here, the Saturn Astra is an example. It is essentially the same vehicle updated for emission and safety regulations in the U.S. Few people outside of the industry really understand the complexity of designing and building a car, which is one reason few with deep understanding of the industry are major critics.
See the NewsHour's special on fuel efficient cars, global warming, and the prices of alternative fuels.