SUV Confrontation
According to this story in the Financial Times, SUV sales are up 14% and the government is considering measures to limit their popularity and reduce their impact on fuel consumption and urban congestion. While this sounds like a plausible headline for the US, in fact the story is from Europe, where SUV sales are apparently up to a half-million units per year, or about 5% of the total market. That doesn't sound like much compared to the US, but considering gasoline that costs roughly $5 per gallon, and city streets that are often barely wide enough for a normal car, it's something that European governments don't think they can ignore.

The first showdown may occur in Sweden, where the parliament is contemplating an SUV tax of SKr 60,000 (about $8,500,) while France is looking at a tax of up to 3200 Euros ($4,000.) Carmakers such as Volvo are complaining this would cut into sales and production of some of their most popular and profitable vehicles. I'm sure Detroit would share this concern.

But while the US car industry has been successful at fending off stricter or rationalized Corporate Average Fuel Economy standards (e.g., reducing the difference between car and light truck standards,) Europe's priorities are different. Urban congestion is a very serious problem in centers like London and Paris, and climate change is a major policy driver at both the EU and national government levels. Some industries are already required to trade carbon emissions credits.

For European governments looking at ways to reduce oil consumption and its environmental consequences, SUV taxes might be more popular than further increases in taxes on gasoline or engine displacement, since the SUV constituency is still fairly small. It's harder to see what implications such measures might have for the US market, where the SUV trend is starting to plateau and morph into a new wave of "crossover" and other station-wagon-like vehicles.