D.         Passenger Car and Light Truck Fleet Economy Averages

Passenger car CAFE increased substantially between 1978 and 1988, from 19.9 mpg to

28.8 mpg, but has remained relatively constant until 2003 (see Figure II-4 and Table II-6).  In MY 2004, passenger car CAFE was 29.5 mpg.  Light truck CAFE increased from 18.5 mpg in 1980 to a high of 21.7 mpg in 1987.  In MY 2004, the light truck fleet CAFE average achieved 21.5 mpg.

Figure II-4 illustrates an increase in the light duty fleet (combined passenger cars and light trucks) average CAFE through MY 1987, followed by a gradual decline. (Also, see Table II-6.)  The shift to light trucks for general transportation has had a significant effect on fuel consumption, and may continue to do so in the future if sales of light trucks remain relatively constant or increase.  In fact, due largely to the increasing proportion of light trucks in the fleet, the overall light vehicle fleet CAFE average was 24.6 mpg in MY 2004.  The all-time high CAFE level for the overall light vehicle fleet was 26.2 mpg in MY 1987.

E.     Domestic and Import Fleet Fuel Economy Averages

Domestic and import passenger car fleet average CAFE values have improved since

MY 1978, although the increase is far more dramatic for the domestic fleet.  In MY 2004, the domestic passenger car fleet average CAFE value improved to 29.9 mpg, the largest ever recorded.  In MY 2004, the import passenger car fleet average CAFE value was 28.7 mpg.  Compared with MY 1978, this reflects an increase of 11.2 mpg for domestic cars and 1.4 mpg for import cars. 

        The disparity between the average CAFEs of the import and domestic manufacturers has declined in recent years as domestic manufacturers have maintained relatively stable CAFE values and vehicle offerings, while the import manufacturers have introduced new vehicle offerings that feature larger vehicles.

FIgure II-4

CASE PERFORMANCE TOTAL FLEET
 

                                                                                                                                                                                        Table II-6

*Light trucks from foreign-based manufacturers.  NOTE:  Beginning with MY 1999, the agency ceased categorizing the total light truck fleet by either domestic or import fleets.

SECTION III:  RECENT ACTIVITIES

A.    Light Truck CAFE Standards

49 U.S.C. 32902(a) provides, for non-passenger automobiles, that at least 18 months before the beginning of each model year, the Secretary of Transportation shall prescribe by regulation average fuel economy standards for automobiles (except passenger automobiles) manufactured by a manufacturer in that model year.  Each standard shall be the maximum feasible average fuel economy level that the Secretary decides the manufacturers can achieve in that model year.  In calendar year 2003, NHTSA published a final rule establishing light truck CAFE standards of   21.0 mpg for MY 2005, 21.6 mpg for MY 2006, and 22.2 mpg for MY 2007 (67 FR 16052;

April 7, 2003).  The agency used calendar year 2004 to focus on reforming the automobile fuel economy standards program, for light trucks.  (See Section E.)

B. Low Volume Petitions

49 U.S.C. 32902(d) provides that a low volume manufacturer of passenger cars may be exempted from the generally applicable passenger car fuel economy standards, if these standards are more stringent than the maximum feasible average fuel economy for that manufacturer, and if NHTSA establishes an alternative standard for that manufacturer at its maximum feasible level.  A low volume manufacturer is one that manufactured fewer than 10,000 passenger cars

worldwide, in the model year for which the exemption is sought (the affected model year) and in the second model year preceding that model year.  In 2004, NHTSA did not act on any low volume petitions.

C.  Enforcement

49 U.S.C. 32912(b) imposes a civil penalty of $5.50 for each tenth of a mpg by which a manufacturer's CAFE level falls short of the standard, multiplied by the total number of passenger automobiles or light trucks produced by the manufacturer in that model year.  Credits earned for exceeding the standard, in any of the three model years immediately before or subsequent to the model years in question, can be used to offset the penalty.

Table III-1 shows CAFE fines paid by manufacturers for MY 2003.  Porsche paid civil penalties totaling $3,538,243.50 for failing to comply with both the CAFE standards of 27.5 mpg for passenger cars and 20.7 mpg for light trucks.

Table III-1

   *For Light Trucks                                                              

D.  Carryback/Carryforward Plans

49 U.S.C. 32903 allows an automobile manufacturer to earn fuel economy credits during any model year in which the manufacturer’s fleet exceeds the established CAFE standard.  The amount of credits a manufacturer earns is determined by multiplying the number of tenths of a mile per gallon by which the average fuel economy of the manufacturer’s fleet in the model year exceeds the standard by the total number of vehicles in the manufacturer’s fleet for the model year.

Already earned CAFE credits are carried forward by the agency (with affected manufacturers given an opportunity to comment on the agency’s allocation of credits), and distributed to any of the three succeeding model years in which the manufacturer’s fleet falls below the CAFE standard.  For example, credits earned in MY 2001 may be used to offset deficiencies in MYs 2002, 2003, and/or 2004.  A manufacturer also may submit to the agency a carryback plan to demonstrate that it will earn sufficient credits within the following three model years, which can be allocated to offset penalties in the model year involved.

            Nissan submitted a carryforward plan dated October 10, 2003 to the agency for its

MY 2003 import passenger car fleet CAFE compliance, using credits earned in MY 2000 to offset its MY 2003 shortfall liability.  NHTSA approved this carryforward plan on January 7, 2004.

            BMW submitted a carryforward plan dated September 14, 2004 to the agency for its

MY 2002 light truck fleet CAFE compliance, using credits earned in MY 2005 to offset its      MY 2002 shortfall liability.  Action on this petition will be completed in 2005.

            Lotus submitted a carryforward plan dated March 24, 2004 to the agency for its

MYs 2002, 2003, and 2004 import passenger car fleet CAFE compliance, using credits earned in MY 2005 to offset its MYs 2002, 2003, and 2004 shortfall liability.  NHTSA approved this carryforward plan on July 21, 2004.

E.         Reforming the Automobile Fuel Economy Standards Program

                        In calendar year 2004, NHTSA continued analytical work, technology assessment, and rulemaking activities.  The agency published an advance notice of proposed rulemaking (68 FR 74908; December 29, 2003).  The agency’s docket for this notice closed on April 27, 2004, with a total of 1,460 recorded submissions.  It is the agency’s intent to identify and implement reforms to the CAFE program that will facilitate improvements in fuel economy without compromising motor vehicle safety or employment.  A comprehensive review of the CAFE program, including development and analysis of CAFE reform proposals was conducted, possibly resulting in one or more rulemakings.  Much of the analysis needed to determine new CAFE standards occurred in calendar year 2004.   

F.    Nissan Two-Fleet Rule Exemption

On April 22, 2004, NHTSA granted a petition that would enable Nissan North America to figure its CAFE on a single fleet. The CAFE statute requires NHTSA to grant such petitions unless it finds that doing so would reduce jobs in the United States related to motor vehicle manufacturing. In its analysis, NHTSA found that granting the petition would not reduce employment in the United States and that it might continue several parts-manufacturing jobs in this country.  NHTSA estimated that jobs would be lost if it denied Nissan’s petition.

Under a “two-fleet” rule, the CAFE statute requires that auto manufacturers, in calculating fuel economy, divide their vehicles into domestic and non-domestic fleets.  With the petition granted, Nissan can combine its fuel-efficient Mexican-made model with its less fuel-efficient models to create a single fleet that is more likely to meet the CAFE standard.  The exemption from the two-fleet rule applies to 2006-2010 model year cars (69 FR 21883).