New Regs Drive Up Truck Prices

Buy now-pre-2007 models don't have to be retrofitted to meet new standards.


Federal rules aimed at making heavy-duty diesel truck engines run 90 percent cleaner by 2007 are expected to drive up the prices for new trucks and drive down the fuel mileage those engines can get. Fleet managers can, however, avoid the added new truck costs in 2007 by upgrading their truck fleets now, while the old laws are still in effect, according to a number of industry watchdogs.

The new laws apply to truck model years 2007 and later and mandate much lower allowable particulate, nitrogen oxide and non-methane hydrocarbon emissions. They cover all heavy-duty vehicles'with a gross vehicle weight rating of 8,500 pounds or more. They also eliminate the current crankcase emissions control exception for heavy-duty diesel engines.

Once engine manufacturers roll out their 2007 models, new truck costs are expected to rise because equipment manufacturers will need to improve lubricants, change vehicle designs and add aftertreatment components, like additional filters, absorbers and selective catalytic reduction systems, to reduce emissions. Just how much the new systems will add to truck sticker prices is a matter of debate, but industry analysts, insiders and government regulators all agree that truck prices will definitely rise.

Some estimates place the expected cost increases at about $10,000, while the U.S. Environmental Protection Agency (EPA), the author of the new rules, predicts much lower pricing gains. "We're looking at about a 1 percent increase for the additional new equipment," says John Millett, an EPA spokesman.

But even at just 1 percent, that could amount to about $1,500 more per truck, assuming that new trucks cost about $150,000 each. It could, therefore, be to a fleet's benefit to do a pre-buy now, says Glen Kedzie, assistant general counsel for the American Trucking Associations, based in Alexandria, VA.

Trucking fleets that do buy new vehicles now are not required to retrofit pre-2007 vehicles to meet the new standards. "Though EPA does encourage the retrofitting of older equipment, it is strictly a voluntary program," says Millett.

Kedzie warns, however, that pre-buying could mean spending extra cash at a time when many companies had not planned on it. "You have to be mindful of the potential effects on your own operations," he says.

Here are a couple of questions Kedzie suggests fleet managers ask themselves before deciding to pre-buy:

*Can you absorb the cost of buying additional trucks outside of your normal buying cycle?

*If you pre-buy, how long do you plan on holding onto the new trucks?

*Will you ride out the standards through 2010?

*How far will your new vehicle warranty take you?

*When you start getting beyond three or four years with your trucks, operating costs start going up. What are your maintenance costs going to be?

"You need to be mindful of these things if you plan on getting into a longer turn-over cycle for your trucks. You also need to involve your maintenance folks, purchasing folks, accountants, etc.," he advises.

Other Considerations

Despite the temptation to pre-buy, there are many other things to consider as well. For one, several engine and truck manufacturers are now trying to secure tax credits and other government incentives to help truck buyers defray the rising costs once the new engines hit the market. EPA has already been working to get government help for school districts (whose school buses are also included in the new rules) and other government agencies, says Millett.

Next, there are the environmental impacts, as the ultimate goal of the new rules is to improve air quality. "All of us need to clean up the air, and buying trucks now to avoid the standards does not meet that goal," says a spokesman for the National Private Truck Council, based in Alexandria, VA.

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