“Congress Didn’t Intend to Create Suvs”

Michael Giberson

From Two Billion Cars by Daniel Sperling and Deborah Gordon:

Ironically, it was the fuel economy standards adopted by Congress in 1975 that set the stage for the later surge of gas-guzzling SUVs and light trucks. As Congress was designing its fuel economy, safety, and emission standards, Detroit lobbied to exempt light trucks, which at the time were used mostly by businesses and farms for hauling goods and providing services. This loophole was written into law, with light trucks subject to less stringent requirements. They also were exempt from the large tax imposed on “gas guzzlers.” The light-truck loopholes were to be the industry’s savior for almost three decades. Chrysler recovered from its 1980 near-bankruptcy in part by taking advantage of those loopholes, producing the first modern minivan, a vehicle built on a truck platform but designed for family travel. Minivans became the new version of the station wagon, only “better” because they were cheaper to make and buy, thanks to the gentler energy, emissions, and safety regulations, and their exemption from the gas-guzzler tax.

Consumers flocked to these cheaper carlike trucks. The advent of the minivan was accompanied by a slow expansion of the pickup truck market and soon followed by a surge of SUVs in the 1990s. Chrysler was again the leader, building on its 1987 acquisition of American Motors Corporation and its Jeep vehicle line to pioneer the SUV market. Ford and GM followed. SUVs flourished.

I think this brief narrative puts too much emphasis on the role of Congress, and neglects the effects of rising incomes and changing gasoline prices on automobile industry developments over the “almost three decades” discussed. Nonetheless, the episode should serve as a warning to folks with grand policy ambitions about the weaknesses of piecemeal, ad hoc interventions into people’s lives.