Small Cars Are Getting Huge. Are Fuel Economy Regulations to Blame?
This is how Corporate Average Fuel Economy, or CAFE, regulations, can affect how big a manufacturer builds its vehicles.
If you pay attention to the auto industry for any length of time—or even spend some time simply car-spotting as you sit in traffic—you'll have noticed an obvious truth about modern cars: They're big, and they keep getting bigger. This isn't misplaced nostalgia or confirmation bias, either, because it's definitively true that vehicles have swelled in size in recent decades. Trucks and crossovers are more popular than ever, with light trucks outselling cars three to one. There are some obvious explanations for the steady growth in vehicle size, of course: taller people, stricter safety standards that demand stronger vehicles, more powerful engines that can make weight less of a concern. But these trends work on a scale of generations, not years; they're insufficient to explain just how quickly crossovers have dominated the landscape and why cars have gotten larger.
However, there is one counterintuitive explanation for ever-larger cars with every passing model year: Fuel economy regulations.
Our regulatory environment, as you'll soon see, is intended to encourage manufacturers to build small, fuel-efficient vehicles. But despite the governmental push for more efficient, eco-friendly cars, the actual data does not lie: Modern cars are growing at a rate that seems untenable.
Some quick examples can be spotted on nearly any city street. The Honda Civic's grown seven inches from bumper to bumper in the past decade. The Mini Cooper's stretched by five inches. Even the ever-economical Prius has added four inches in length since 2012. And these are just the survivors of the ever-increasing trend toward crossovers and SUVs; the list of small cars you won't be seeing on city streets in the near future grows longer by the day. The Chevy Spark is set for demise at the end of the year. Ford no longer makes cars except for the Mustang. Honda killed the Fit, Toyota killed the Yaris, Dodge killed the Dart.
There are a bunch of reasons for this, including tougher safety standards and shifting buyer trends. But how manufacturers actually interpret government incentives—even ones as seemingly straightforward as fuel economy—is also worth a closer look.
The Devil's in the Details
To grasp America's stance on fuel economy, we have to go back to the days of the Nixon Administration.
American fuel economy standards came into being in 1975 in the wake of the oil crisis after decades of devil-may-care attitudes towards fuel efficiency. Those standards, known as the Corporate Average Fuel Economy (CAFE), were initially created by Congress in the oil-starved mid-'70s with a simple goal: To reduce dependency on imported oil. Over the decades, as the environmental hazards of climate change became clear, that goal shifted from solely fuel efficiency to one that also focused on greenhouse gas emissions.
In the modern era, CAFE standards theoretically have two simple, incentivized goals for manufacturers: To build more efficient cars that get better mileage and emit fewer greenhouse gases. But this undersells the true complexity of the oft-revised standards, and to fully understand the complexity of CAFE regulations, we have to first delve into how they're broken down by type of car and how those distinctions affect the actual mileage goals.
First off, there's the difference between what are considered "passenger vehicles" and "light trucks." "Light trucks" have a significantly lower mileage target than "passenger vehicles," even if they're the same overall size physically. Light trucks might bring to mind something like a Ford Maverick, but in reality, the classification extends to almost any vehicle bigger and taller than a sedan.
The legal definition of what entails a "light truck" is complicated, but the simplest way to define it (as described in Title 49, Subtitle B, Chapter V, Part 523, section § 523.5 of the Federal Code of Regulations) is that it has to be either a 10-plus passenger van, be able to "transport property on an open bed," or possess three rows of fold-flat seating that "create a flat, leveled cargo surface" through the rear of the vehicle. Right off the bat, that describes vans, pickup trucks, and most modern minivans.
Perhaps most crucially, however, light trucks must also meet a set of measured requirements that deem them capable of "off-highway operation." The measurements and attributes are as follows:
If you examine these rules closely, a shocking number of vehicles fit. Let's take, for example, the Subaru Crosstrek.
The Crosstrek is a unibody hatchback based on the Subaru Impreza. By most common-sense metrics, it's a car with a little extra ground clearance. And yet, it has all-wheel drive (there is no legal distinction for four-wheel drive versus all-wheel drive), so (b)(1) is already met.
Now, let's examine (b)(2), where four out of five requirements are needed to be considered "capable of off-highway operation." For the Crosstrek, the breakover angle is 19.4 degrees (more than 14), the departure angle is 29 degrees (more than 20), the running clearance is 8.7 inches (more than 20 cm/7.8 inches), and the front and rear axle clearances are more than 18 cm (as a non-solid-axle vehicle, running clearance and axle clearance will be similar). That makes four out of five requirements. Legally, the Subaru Crosstrek is a light truck. Congratulations.
With that light truck classification comes the benefit of less-strict mileage standards. Whether consumers adore the vehicles or not, there's a clear incentive here for manufacturers to build and sell more light trucks; they can game Section 523.5 to build cars that are judged less harshly by CAFE standards. So while the Crosstrek is my example, it's far from the only one out there. There's a reason why light trucks accounted for nearly 80 percent of new vehicles sold last month: Almost every crossover or SUV with AWD for sale today is a light truck.
The 'Footprint' Model
Unfortunately, CAFE is more complex than just the light truck and passenger car dichotomy. There are also different economy targets based on the "footprint" of the vehicle—that is, the car's wheelbase times its average track width—to allow for variances in efficiency from, say, a full-size pickup versus a small sedan. These charts from NHTSA help visually demonstrate the "footprint" model of efficiency scoring. Vehicles with bigger footprints can be less efficient, while smaller ones need to be more efficient.
Before 2011 and the implementation of this footprint-based model, there was only a simple mileage target. The EPA took a weighted mean of all the passenger cars or light trucks a manufacturer sold in a given year and determined if it exceeded the mpg goal for the category. With the introduction of the footprint standard in 2011, the EPA now uses an inverse regression model to determine what any given vehicle's target efficiency is and scores it against that, rather than a generic "passenger car" or "light truck" target.
Not all automakers were on board with the new model after it was introduced, however. Volkswagen's then-VP of Communications Tony Cervone said, "The proposal encourages manufacturers and customers to shift toward larger, less efficient vehicles." Also on the same page, Mercedes-Benz stated the proposal “clearly favors large SUVs and pickup trucks.”
It's easy to see why companies such as Volkswagen responded in such a way. In 2011, Volkswagen had a majority car-based lineup, which put it in a much more difficult position. There were already plentiful reasons for car manufacturers to super-size their vehicles, with the first and most obvious incentive being that larger vehicles tend to have a much higher profit margin than small ones. For manufacturers that already produced trucks in droves, these new regulations worked very much in their favor.
And beyond the basic economics of car manufacturing and concerned manufacturers, subsequent scientific research backed the belief that cars would get bigger. As the new footprint-based model was unveiled, a University of Michigan study estimated that the average vehicle sold would increase from two to 32 percent in size with it in place versus without it because of the medley of factors that favor larger vehicles over more efficient ones. The repercussions of this would be higher traffic fatalities, more CO2 emissions, and critically, less efficient cars overall. And in the decade since the study was released, it looks downright prescient.
Despite the footprint model only being around for a little over a decade in its current form, 78 percent of vehicles sold in 2021 were light trucks versus just 52 percent a decade earlier in 2011. And yes, the average fuel economy of all light vehicles did hit an all-time high in 2020, but that record-setting number was 25.7 mpg, a far cry short of the 48 mpg targeted for 2026. Even the EPA itself noted that while mpg was record-high, so too was weight, horsepower, and vehicle footprint, and that part of the strides in efficiency had been partially erased by the ever-increasing numbers of light truck sales.
While potential car buyers often say that yes, fuel efficiency is important to them, studies show that it's actually unclear at best when it comes to how much buyers will actually pay for a car that's more efficient. Real-world post-purchase studies show that consumers instead value roominess, safety, and positive reviews much more than fuel efficiency. So in theory, car buyers have benefitted from a world of larger vehicles.
But cars are not sold, bought, and driven in a vacuum. Even if most buyers are satisfied with the current trend toward larger, slightly more efficient vehicles, the secondary effects are concerning even beyond the obvious matter of emissions. Pedestrian fatalities have skyrocketed in recent decades, partly due to larger vehicles with worse visibility. Tire and brake microplastics, which are emitted by heavier vehicles in greater quantities, are polluting water supplies around the globe. Even taking fuel economy out of the picture, large cars are worse for the world than small cars.
Not Just Because of CAFE
It's impossible to pin all vehicle growth and crossover-ification of modern vehicles on CAFE standards, of course, because the automotive regulatory environment is constantly in flux. Safety standards continually get stricter and favor larger, heavier cars. Consumers tend to feel safer in SUVs (and generally, in multi-vehicle head-on collisions, drivers are vastly more likely to survive than someone driving a car), they're easier to load and get into and out of—and, in my experience—it's impossible to see over traffic in a normal sedan nowadays, making it feel vastly more dangerous to not keep up with the arms race for bigger, taller vehicles. All of it becomes a vicious cycle as small cars become relatively more dangerous and consumers flock to larger cars for safety. Repeat infinitely until 9,000-pound pickup trucks become a product for sale and not a golden-era Simpsons joke.
This is the catch-22 of a world where, on one hand, we want to limit emissions—but on the other, still recognize that some people truly do need larger vehicles and pickups. It's a bit of a chicken and egg question: Are so many people wanting and buying bigger cars that automakers can only supply the demand? Or have automakers purposefully pinched off our selection of small cars so we have no choice but to buy big cars?
The broad CAFE classifications and more relaxed mileage targets certainly incentivize prioritizing light trucks and SUVs, and manufacturers will continue to respond in turn to these incentives. And regardless of surveyed preferences, consumers will keep buying what's on the lot. In short, barring drastic changes to the automotive and regulatory worlds in the near future, small cars aren't coming back any time soon.
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