Despite changes being announced by president Obama today (19 May) to the Corporate Average Fuel Economy (CAFE) regulations, intended to encourage automakers to build and sell more fuel efficient cars, fundamental problems with CAFE remain, according to

"Defining what should be built does not create demand," said Jeremy Anwyl, CEO of the California buyers guide and analysis firm. "There are tons of great fuel-efficient cars out there today but most consumers aren't interested, and CAFE doesn't deal with the demand side at all."

"A lesson regulators and many in the green community still haven't learned is that autos are still a major investment made as much with emotion as with common sense," added John O'Dell, editor of "It won't matter that the vehicles that result from this national programme effort average 50 or 60 miles per gallon if no one wants to buy them."

Automakers whose sales-weighted average fuel economy is above the CAFE standard must pay a fine to the government. A number of automakers resign themselves to paying that fine each year since it is more cost-effective and less brand-damaging than attempting to sell unwanted vehicles just to meet the standards.

"For some automakers, it would be market suicide to meet CAFE standards," Anwyl acknowledged. "Minimising our impact on the environment is a great goal, but this isn't the way to get there."

Instead, Anwyl suggested politicians look overseas for ideas and inspiration.

"One reason that foreign automakers do well when gas gets expensive here in the US is because they need fuel efficient vehicles for their home markets, which have high fuel prices that are consistently inflated through taxes," said editor Michelle Krebs.

Some countries also levy a heavier tax on vehicles with higher horsepower and bigger engines, she noted.