Truck emissions set to tighten in 2007
With the considerable number of regulatory-inspired changes to 2007 trucks, local and state government fleet operators have a right to be concerned. By next year, emission level requirements for new diesel trucks are going to tighten substantially, raising sticker prices and operation costs. The restrictions are the second set of emission changes affecting trucks; the first went into effect in October 2002 and the last set will be enforced on Jan. 1, 2010.
Truck buyers will feel the financial ramifications of the 2007 regulations in several ways as sticker prices rise $5,000 to $6,000 per unit for medium-duty trucks and school buses, and between $7,000 and $10,000 for vocational and Class 8 highway trucks, according to Warrenville, Ill.-based International Truck & Bus Corp. Greensboro, N.C.-based Volvo Trucks North America will add about $7,500 per Class 8 product, while highway tractors from its sister company Allentown, Pa.-based Mack Trucks are going to cost $7,000 more.
Also on the way are higher diesel prices — between five to 13 cents more per gallon — for ultra low sulfur diesel (ULSD) fuel. ULSD is critical for new diesel engines because the high amounts of sulfur in regular diesel fuel (500 parts per million versus 15 in ULSD) can render the new engines’ particulate filters inoperable, says Scot Kress, Volvo’s vice president of sales and marketing.
However, Doug Weichman, fleet manager for Palm Beach County, Fla., is not anxious about the 2007 changes. Instead of rushing to buy 2006 models to avoid the cost increases, Weichman is preparing for 2007 and beyond, securing increases for his vehicle replacement budget, ensuring all 12 county refueling sites switch to ULSD fuel and lining up training resources for his staff.
Weichman says, in many ways, his current planning is no different than in years past — he just has more factors to consider. “We’re doing our budget right now for 2007, and we’re looking at buying 57 new trucks,” he says. “It’s going to cost us about $10,000 more per heavy truck and $5,000 more per medium unit, which translates into roughly $500,000 more for our acquisition budget. Our county’s overall budget is $4 billion a year, so $500,000 is just a small chunk of change within that figure.”
To Weichman, the sticker price increase is less important than his equipment’s salvage value, so he replaces his trucks every seven years, despite the technology changes. “When you spread out an extra $10,000 over a seven-year life cycle, the cost increase per month isn’t that large,” he says. “On the back end, however, by staying on a seven-year replacement cycle, we’ve been able to recover up to 25 percent of its original value, a huge value when measured against the increase we’re paying on the front end.”
It may be too late for fleets to buy trucks before 2007. Paul Vikner, president and CEO of Mack, says there is insufficient manufacturing capacity for fleets to pre-buy all the trucks they would like. “It’s unlikely that the [manufacturers] are going to add plant capacity, and it’s even [less likely] that our suppliers will,” he said at the recent Technology & Council Meeting in Tampa. “Customers are going to face a tough call soon, as we expect by May of this year that order slots are going to be filled up for 2006. The decision they face is to either buy ’07 trucks or risk not having enough rolling stock to meet demand, and ’07 model pricing is going to play a large role in that decision.”
Sean Kilcarr is senior editor at Fleet Owner