CHANCES of a federal incentive program to encourage purchases of heavy-duty trucks with 2007 engines seem to have brightened in the wake of President George W Bush's reelection. This would be a plus for everyone involved.
Truck fleets and heavy truck manufacturers would benefit by avoiding the surge in pre-buying that sent the industry through wild economic gyrations in 2002 and 2003.
The Environmental Protection Agency (EPA) would gain from a more orderly rollout of new trucks that meet the 2007 emission requirements and reduce pollution.
Against the backdrop of the October 2002 experience, there are indications EPA may endorse a developing proposal in Congress to provide financial incentives to help heavy-duty truck buyers offset the expected higher cost of new trucks that meet the 2007 emission regulations. Specific details are not yet available.
EPA also reportedly has acknowledged that a pre-buy in advance of the 2007 deadline is a certainty unless the federal government takes some action, according to the American Trucking Associations. The EPA viewpoint echoes the conclusion of a study released by the General Accounting Office (GAO) earlier this year.
The October 2002 pre-buy occurred because fleets were concerned about higher costs and reduced life and reliability of engines that many fleet managers believed had not received adequate field testing, the GAO reported. As a result, sales of trucks with older engines surged.
To meet the demand for trucks with the older engines, many truck manufacturers significantly increased production prior to October 2002. Demand then plummeted in October, and the manufacturers had to quickly reduce production and layoff workers. Profits fell and operations were disrupted.
EPA had estimated that the October 2002 engines would reduce nitrogen oxide emissions by about four million tons over the life of the new engines. But fleets initially bought more trucks with pre-October 2002 engines and are running trucks longer, and the expected emission reductions were not achieved.
All parties agree that they would like to avoid that scenario with the next round of engine emission reductions. EPA's 2007 heavy truck engine emission regulations call for a more than 50% reduction in nitrogen oxides and a 90% drop in particulate matter.
Engines and the emission control technology needed with them will cost more. The EPA estimates a cost increase of at least $3,000 per truck initially. In addition, life-cycle costs for 2007 engines could go up by as much as $4,000 per unit.
Manufacturers plan to have limited numbers of prototype engines ready for testing by mid- to late 2005. However, truck fleets say they need new engines 18 to 24 months before the 2007 deadline to test engines in all weather conditions and develop longterm purchasing plans.
A federal incentive program could help push the engine introduction process along, which would remove some of the uncertainty for fleet managers and would make them less likely to increase purchases of trucks with older engines before the 2007 deadline. It certainly would make the higher costs of the new engines a little easier to stomach.