How will GHG Phase II affect truck orders?

How will GHG Phase II affect truck orders?

The U.S. Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) announced a joint standard in June of this year for fuel economy and greenhouse gas—the Phase II Greenhouse Gas (GHG) standards. The incoming standards will cover trucks from model year 2019 to 2027 and will have far-reaching effects in all phases of the industry. Similar standards in past years—notably those in 2007 and 2010—led to increased orders throughout the industry. Will the latest standards have that same effect?

In a word: No.

“We don’t expect any impact on demand as a result of the joint fuel economy standards,” said Steve Tam, vice president of the commercial vehicle sector for ACT Research. “During this standard, the greenhouse gas emissions are almost inconsequential. In essence, when you meet the fuel economy standards you’re pretty much automatically meeting the greenhouse gas standards as well. Things like improved aerodynamics, reduced drag coefficient or low-rolling resistance tires take care of this on their own. This means there’s no need to order any new equipment to make sure that happens.”

Jonathan Starks, director of transportation analysis for FTR, concurred.

“The best way to reduce GHG is to reduce fuel use,” Starks said. “For this reason alone, we believe that the effect on the market will be muted in contrast to what occurred in 2006 and 2007 when engines were rushed out the door in order to be certified before the new regulations on particulate matter went into effect.”

This is a standard for which industry has been prepared for some time, and because of that, the experts agree that there will be no explosion of orders like we have seen in the past.

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