US car makers clamouring for less strict fuel consumption targets could be excluding themselves from huge sectors of the global automotive market and effectively signing their own death warrant. This appears to be the view of informed industry observers as the US Environmental Protection Agency starts the process of reversing MPG standards set under the Obama administration.

Under the controversial leader appointed by Donald Trump, Scott Pruitt, the US EPA is in the process of relaxing miles per gallon targets for new cars in the US. These were set at 54 mpg average by 2025 for light-duty vehicles. It now seems that that the Trump administration is set to reduce this target by at least a quarter in an effort to appease the US car buying public with its thirst for gas guzzling SUVs and pick-ups. 

On the face of it this should be good news for US car makers who had campaigned for such a policy. However, many others believe it is a short sighted move that will mean US manufacturers fall behind the rest of the world on new technology such as hybrids and all electric vehicles.

With both China and the European Union set to implement stricter fuel consumption rules in an effort to further reduce emissions, US cars could in a relatively short few years be excluded from most of the global growth markets. It is widely believed that US car sales have reached a plateau and global growth will all be concentrated in the Far East, especially China. However, US carmakers will find the vast majority of their models excluded from these markets because they cannot meet strict consumption and emission standards, while the makers may also lag behind the rest of the world in technological knowhow. 

US car makers could also find themselves in trouble in their domestic market if oil prices rise. This will very likely mean their home buyers will be looking for fuel efficient cars that are not in their model line-up and will so turn to imported more economical vehicles.

In short it appears that while car makers in China and Europe are taking a long term approach, the US car makers have jumped on Trump’s anti environmental stances to make some fast money, a strategy that could prove to be serious short-termism.