New Fuel Economy Targets Could Raise Vehicle Prices

As Canadian automakers spend billions on technology to meet new federal standards, how much of those costs will they pass on to consumers?

TORONTO β€” Vehicle prices will rise as Canadian automakers spend billions on technology to meet new federal standards.
Analysts say the costs per vehicle of new technologies should range from US$3,000 to $7,000 for most automakers.
But Bill Pochiluk, president of AutomotiveCompass LLC, says the hike will be closer to $2,000 for Honda Motor Co. Ltd. and Toyota Motor Corp., since they lead in hybrid engine development.
Analysts say prices will depend on automakers' ability to spread the costs of developing clean diesel engines, electric vehicles and fuel-cell powered cars and how much of those costs they're willing to pass on.
Federal Transport Minister Lawrence Cannon announced on Thursday that Canada will match or exceed U.S. fuel standards.
The new targets require automakers to improve fuel economy by an average of 22 per cent by 2020.
''We welcome the U.S. goal, but we are committed to developing a made-in-Canada standard that achieves, at minimum, that target benchmark against a stringent, dominant North American standard,'' Cannon said in Montreal.
''Is it going to be more expensive? Yes,'' said Jim Miller, executive vice-president of Honda Canada Inc. ''I can't put a number on it.''
The costs will range somewhere between $7,000 suggested by General Motors Corp. vice-chairman Bob Lutz and the $500 figure identified by the Union of Concerned Scientists, said Brett Smith of the Center for Automotive Research in Ann Arbor, Mich.
More in Supply Chain