Efficiency-Related Changes in Automobile and Light Truck Markets, 1978-1986

The Corporate Average Fuel Economy (CAFE) standards for automobiles and light trucks were intended to improve energy efficiency primarily through technological improvements. While it is not clear how much of the impetus for manufacturers to improve fuel economy should be attributed to CAFE, trends in light duty vehicle sales and characteristics since CAFE went into effect in 1978 do indicate that technological improvements contributed importantly to the over 40% increase in automobile fuel economy. Size class shifts are responsible for only 10% of the total gain. Size class shifts have been more important to light trucks, accounting for 18% of the mpg improvement since 1978. The 1978-1986 market for automotive efficiency reflects interactions of demand shifts, regulation, and technological change. Reconsideration of CAFE should begin by seeking to understanding these factors and their history.