Cost-Effectiveness of Fuel Economy Improvements in 1992 Honda Civic Hatchbacks

Since the early 1980s, U.S. auto makers and policy makers have resisted policies to increase automobile fuel economy, arguing in part that such increases were neither technically feasible nor economically justified. This paper analyzes such assertions for the 1992 Honda Civic hatchbacks. These new Hondas are virtually identical to the previous year's models in size, vehicle amenity, engine power, and performance, but they offer substantially increased fuel economy and improved safety. We assess the cost of improving fuel economy using actual retail prices, after correcting for differences in cosmetic features.

Our calculations show that the efficiency of the 1991 Civic DX was improved by 56% from 1991 to 1992, at a cost per conserved gallon of gasoline that is $0.77/gallon, or 30% less than the levelized gasoline price without externalities or taxes. In addition, a comparison of two other Civic models reveals that fuel economy was improved in the 1992 version at no additional cost. Virtually all of the efficiency increases described here were achieved through measures that do not affect safety or vehicle size, such as engine modifications, transmission alterations, and drag reduction.