New Regs Drive Up Truck Prices

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


"Engine manufacturers are committed to meeting these standards and are doing their part to improve the nation's air quality," adds Jed Mandel, president of the Chicago-based Engine Manufac'turers Association. "Engine manufacturers have already achieved significantly lower emissions from energy-efficient diesel engines. Now we're working to reduce emissions another 90 percent and make near-zero emissions diesel technology a common reality."

The last time the EPA lowered diesel truck emissions standards was in 2002, and, at that time, there was a massive pre-buy, recalls Kedzie. The environmental benefits the EPA anticipated in 2002 were never fully realized because so many companies were not buying the newer, cleaner engines, he suggests.

Also in 2002, those pre-buys caused havoc on the truck and engine manufacturing industries.

"There was a massive pre-buy, whether companies needed the new equipment or not. This caused a backlog in the production cycle of trucks and engines, and if you did not get your order for new trucks in on time, you got shut out," Kedzie recalls. "Truck manufacturers ramped up their production, but many couldn't handle the demand."

Then once the 2002 engines rolled off the assembly line, demand shrunk drastically and many truck and engine manufacturers had to lay off large numbers of workers.

Now Kedzie sees the same patterns playing out in advance of the 2007 rules. "People are ramping up their truck buys, and if they haven't placed their orders yet, they are budgeting to do so," he says.

This time around, truck and engine manufacturers are better prepared. Many expect to have the first prototypes of their 2007 engines available in the spring and ready to debut at the upcoming truck shows. But for some, that may not offer much relief.

While optimistic about this new equipment, Kedzie notes that information gained from those test engines will be kept confidential between the engine manufacturers and the companies that use them and will not be shared with the rest of the industry. "If you're not in that first test group, you will not know about potential problems with the engines until you spend the money to buy them," he says.

Also leading to large uncertainty right now is the effects the new EPA-mandated fuel will have on engine performance, fuel efficiency and prices at the pumps. The 2007 regulations re'quire fuel producers to cut the sulfur content in diesel to 15 parts per million (ppm), down from the current level of 500 ppm. The new fuel, which must be available by June 1, 2006, is likely to cost more because of the additional refining and processing required, and could add several hundred dollars in fuel costs per truck each year. But, EPA says that those costs can be offset by the reduced maintenance that will be required once trucks start using the new fuel.

"The new low-sulfur diesel fuel will help fleets burn cleaner and more efficiently. Sulfur in the fuel can actually cause greater maintenance issues, like corrosion, clogging and build-up over time, all of which can be avoided with the new fuel," says Millett.

But ultimately, costs are likely to be the main deciding factor. "2007 will be the third major engine change in the last seven or eight years, and it could be the third quantum leap in price and operating costs, both of which are hard to absorb for many small trucking companies," Kedzie says. "Time is definitely not on our side. So many people are asking for assistance and making their buying decisions now."

Clearing The Air

What the new rules say:

*Acceptable particulate matter (soot) emission for new heavy-duty engines will be set at 0.01 grams per brake-horsepower-hour. The current soot standard is 0.10 g/bhp-hr.

*Smog-causing nitrogen oxides emissions cannot exceed 0.2 g/bhp-hr and hydrocarbon emissions cannot exceed 0.14 g/bhp-hr. The current standard for NOx is 4 g/bhp-hr and the HC standard is 1.3 g/bhp-hr. These standards will be phased-in for diesel vehicles between 2007 and 2010.

*The sulfur content of diesel fuel used in highway vehicles would be limited to 15 parts per million beginning June 1, 2006. The current standard is capped at 500 ppm.

Benefits of EPA's proposal:

*As a result of EPA's proposal, each new truck would be as much as 90 percent cleaner than today's trucks.

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