Classic Case - General Motors and the Corporate Average Fuel Economy Standards

General Motors and the Corporate Average Fuel Economy Standards


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  • Product Description

    In 1984, General Motors Corporation was headed for a potentially expensive collision with federal corporate average fuel economy (CAFE) standards. GM had exceeded the steadily increasing standards in the program's early years, when high gasoline prices fueled consumer demand for gas-miserly cars. But when gas prices turned downward in the eighties, their rate of improvement dropped as well. In late 1984, GM notified the National Highway Traffic Safety Administration that it might have to cover the projected 1984 shortfall with fuel economy credits it hoped to earn by exceeding the standards in the future. At the same time, the GM public affairs staff assembled a CAFE "Issues Management Team" to consider what additional actions GM would have to take to meet the standards.

    Learning Objective:
    The primary aim of the case is to allow students to look at a public policy problem from the perspective of a private sector actor: How can GM manage the politics of the administrative process to achieve its objectives, given the suspicion with which GM's positions on regulatory matters are viewed? The case is enriched by Chrysler's highly visible political opposition to the GM stance and the implications for the market shares of the two firms. This case is a companion to NHTSA and the Corporate Average Fuel Economy Standards (C15-86-672.0) as well as to an earlier case, Corporate Average Fuel Economy Standards (C16-86-670.0).

  • Other Details

    Publication Date: January 01, 1986
    HKS Case Number: 671.0
    Case Author: Linda Kincaid
    Faculty Lead: Robert A . Leone
    Pages (incl. exhibits): 9
    Setting: United States
    Language: English
    _year: Older than 2000
    _pages: 1-15
    _geography: US & Canada
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