Vehicles sales may be surging now -- even against the headwinds of high gas prices. And average gas mileage is at an all-time high.

But car dealers are concerned that the federal government’s proposed higher fuel-economy standards are going to hike prices and reduce sales of new and used vehicles. The Obama administration’s new gas-mileage rules under its Corporate Average Fuel Economy (CAFE) standard recommendations are designed to combat future higher fuel prices and alleviate environmental concerns.

A study commissioned by the National Automobile Dealers Association (NADA) found that the federal fuel-economy standards scheduled to be enacted from 2017 to 2025 will raise car prices by an average of $2,937 per vehicle, and also projects that the least-expensive new car will cost about $15,700. The NADA study also claims that the price hike will make a new car unaffordable for up to 4.2 million households. In a worst-case scenario, the average vehicle price will rise $12,349 and result in 14.9 million households not being able to afford that new-car smell.

The study says that used-car prices would also increase, and that drivers who are unable to afford a new car would be forced into the used-car market. And the surge in used-car demand would raise prices.

But the study doesn't consider the lifetime costs of operating the car -- and the overall fuel savings that counter the initial higher purchase price. It also doesn’t point out that the auto industry has fought previous CAFE standards that have raised average fuel economy, and those standards clearly aren’t hurting present-day vehicle sales. In fact, high-mpg vehicles are currently some of the most sought-after by car shoppers, and have become a profit center for dealers as car buyers load them with options.

[Source: USA Today]