The One Big Beautiful Bill May Bring Back the Station Wagon

Those of us who grew up in the '60s and '70s remember when families with lots of kids (there were more of those back then) would haul their families around in an enormous station wagon. Most of these were just extended versions of a standard sedan, longer, heavier, sometimes with three rows of seats. The parents of a friend of mine, who had six brothers and sisters, moved their family about in a huge Oldsmobile station wagon with a gas-guzzling 455 motor. I'd be guessing as to the gas mileage of that beast, but I would not be at all surprised to learn it was in single digits.

Then, in the mid '70s, the federal government instituted the corporate average fuel economy (CAFE) standards, and at a stroke, all those huge station wagons weren't being built anymore. But there was a loophole: Light trucks had a more lax standard, which led to the rise of minivans and SUVs. People want big vehicles, and they're going to have them.

Now, though, in the One Big Beautiful Bill (OBBB), Congress pulled a good one - they didn't repeal the CAFE standards, but they zeroed out the fines manufacturers pay for exceeding them.

The standards, which were ratcheted up year after year, also wildly distorted the car market. To meet them, automakers had to sell more small cars than consumers wanted to buy, which meant heavily discounting them, and then making the cost up by jacking up prices on the bigger cars most buyers wanted or needed. Carmakers routinely paid extravagant fines for failing to meet the standards. Last year, Chryster had to write a check to Uncle Sam for more than $190 million.
And because the government set tighter standards for passenger cars than light trucks, the industry responded by killing station wagons and replacing them with gas-hogging minivans and SUVs – negating much of the fuel savings the CAFE standards were supposed to produce.
Worse, while Republican administrations would sometimes try to dial the mandate back, Democrats would crank them up. Obama imposed a fuel economy mandate that was supposed to hit 54.5 mpg for cars and light-duty trucks by 2025, which, as we pointed out in the pages of Investor’s Business Daily at the time, was designed to force EVs onto the market, because even compact hybrid cars can’t get that kind of mileage.

But here's where Congress comes in:

This time around, Trump is again planning to roll the CAFE standards back. But Congress did him one better. Rather than wait for regulators to rewrite the rule, which can take years and be subject be endless lobbying and litigation from various interest groups – lawmakers simply zeroed out the penalty as part of the One Big Beautiful Bill.
Now, if a car company sells cars that, on average, exceed whatever the fuel-economy limit is technically in force in a given year, they pay… nothing. The mandate is still in place, but the penalty is now $0.00. (Republicans pulled off the same trick with the dreaded Obamacare insurance mandate — zeroing out the penalty rather than trying to get the mandate repealed.)

This renders the CAFE standards moot. And that's a good thing.

There's Another Big, Beautiful Bill in the Works: What Might Be in It?

Congress's move here has largely flown (or driven) under the radar, but it has big implications for the American automobile industry. Of course, the manufacturers are still free to abide by these standards, and that's how it should be. The manufacturers, not the government, should be making these decisions. The difference is that while the government is compelling manufacturers to abide by an agenda-driven regulation, when left alone, the manufacturers will react to their customers. They will build cars and trucks that the public wants.

Will the giant station wagon come back? I'm guessing they won't. The public has become accustomed to SUVs, and honestly, they're more comfortable, provide better views of the drivers' surroundings, and modern, high-tech vehicles actually get far better mileage than an equivalent vehicle from, say, 1975.

This is a great move. These kinds of decisions belong with consumers, not politicians.

Editor's Note: President Trump is leading America into the "Golden Age" as Democrats try desperately to stop it.

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