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Overview In an effort to curb CO2 emissions and oil use, the HD Na-


tional Program has set fuel-efficiency standards for medium- and heavy-duty vehicles with model years between 2014 and 2018. Medium-duty trucks are those that fall in the Class 4 to 6 categories, with a gross vehicle weight rating (GVWR), a measure of maximum carrying capacity, that ranges from 14,001 to 26,000 lb (6300–11,700 kg); heavy-duty trucks are classified as Class 7 or 8 vehicles, and have a GVWR greater than 26,001 lb. Te regulation’s scope is more expansive, requiring compliance for any on-road truck weighing more than 8500 lb (3825 kg). Tese standards will directly impact truck manufacturers, which must produce compliant en- gines and vehicles. Although manufacturers are expected to incur higher short-term costs to achieve compliance, the net benefits are projected to greatly offset this. Higher operating costs for the production of compliant engines and vehicles will also be partly passed on to retailers and downstream clients, thus spreading the additional costs associated with regulation. Te regulation’s expected spillover effects are compelling, ranging from lower overall transportation costs, technology upgrades and health benefits associated with reduced carbon emissions.


Regulatory Overview Te HD Program includes comple-


Day Cab Class 7 Day Cab Class 8 Cab Class 7 Day Cab Class 8


Sleeper Cab Class 8 Sleeper Cab Class 8


mentary standards from the EPA, which is responsible for setting carbon emission standards, and the NHTSA, which sets fuel economy provisions. Regulation is further divided for three vehicle categories: combination tractors (semi trucks), heavy-duty pickup trucks and vans and vocational vehicles. Te regulation will not cover trailers, but the agencies have stated their intent to include trailers in future rulemak- ing. Medium-duty passenger vehicles above 8500 lb are also excluded from the HD Program. For combination tractors, the EPA and the NHTSA have


tion for gasoline vehicles by the 2018 provisions. Meanwhile, the NHTSA expects a 15% improvement in diesel vehicle fuel consumption and a 10% improvement for gasoline vehicles by the final standards. Te HD program offers manufacturers two phase-in methods: one at 15-20-40-60-100% in each of the model years up to 2018, and the other at 15-20-67-67- 67-100% in model years up to 2019. Lastly, for vocational ve- hicles, the regulation will impact chassis manufacturers under three categories: light-heavy vehicles between class 2B and 5; medium-heavy vehicles (Class 6 and 7); and Class 8 vehicles. Te EPA estimates a 6–9% reduction in emissions, using 2010 as a baseline year. Te following tables detail the regulatory standards for combination tractors and vocational vehicles. For these two categories, the agencies have adopted a gram per ton-mile and gallon per 1000-ton-mile standard. For pickups and vans, the agencies have adopted a payload-dependent gram-per-mile and gallon-per-100-mile standard.


Combination Tractor Standards, Model Year 2017 Combination Tractor Standards, Model Year 2017


Low roof Mid roof High roof Low roof Mid roof High roof 104 80


EPA Emission Standards (g CO2


104 80 66 66


115 73 73


/ton-mile) /ton-mile) 115 86 86


120 72


89 72


120 89


EPA Emission Standards (g CO2


Low roof Low roof 10.2 10.2 7.8 7.8 6.5 6.5


11.3 11.3 8.4 7.2


8.4 7.2


NHTSA Fuel Consumption Standards (gal/1000 ton-mile)


NHTSA Fuel Consumption Standards (gal/1000 ton-mile)


Mid roof High roof Mid roof High roof 11.8 11.8 8.7 8.7 7.1


7.1


Vocational Vehicle Standards, Model Year 2017 Vocational Vehicle Standards, Model Year 2017


Light Heavy Class 2b-5 Medium Heavy Class 6-7 Heavy Class 8


Light Heavy Class 2b-5 Medium Heavy Class 6-7 Heavy Class 8


EPA Emission Standards (g CO2


Source: US Environmental Protection Agency, Office of Transportation and Air Quality Control, August 2011 Source: US Environmental Protection Agency, Office of Transportation and Air Quality Control, August 2011


373 225 222


36.7 22.1 21.8


373 225 222


/ton-mile) /ton-mile)


EPA Emission Standards (g CO2


NHTSA Fuel Consumption Standards (gal/1000 ton-mile)


36.7 22.1 21.8


NHTSA Fuel Consumption Standards (gal/1000 ton-mile)


Impact on Manufacturers and Retailers IBISWorld estimates revenue for the Truck and Bus Manu-


proposed distinct standards for nine subcategories related to weight class, cab type and roof height. According to the agencies’ final regulatory announcement, the standards will achieve a 9–23% reduction in emissions and fuel use by model year 2017 over the 2010 baselines. For heavy-duty pickup trucks and vans, the EPA has set target standard curves ac- cording to a vehicle’s payload, towing capacity, and four-wheel capabilities (combined to form a vehicle’s “work factor”). Te standards will get progressively more stringent for each model year from 2014 to 2018. Te EPA projects a 17% reduction in greenhouse gas emissions for diesel vehicles and a 12% reduc-


18 Motorized Vehicle Manufacturing


facturing industry to stand at $21.0 billion in 2014. Class 8 trucks generate the bulk of industry revenue, accounting for 48.1% of industry sales, followed by Class 7 trucks (22.4%), Class 6 trucks (17.0%) and buses (9.0%). In 2014, profit margins are expected to account for 5.1% of revenue, while purchase costs amount to 80.1% of revenue. In the five years to 2019, revenue for the Truck and Bus


Manufacturing industry is projected to increase at an annual- ized 1.9% to $23.1 billion. With regulation set to take effect, industry manufacturers are expected to incur higher purchase and operating costs during the outlook period, as they roll


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