President Obama Fuel Standards To Strain Truck Manufacturers
President Obama has issued mandatory improved fuel mileage standards for medium and heavy trucks. It will prove to be a real strain on truck manufacturers moving forward.
The truck manufacturing industry has suffered the last few years much as pretty much anyone associated with trucking in general. The primary problem was, well, two issues that arose. Combined, they nearly brought the manufacturers to their knees and now the new fuel emission standards add another burden to the industry. To understand how this is, one must first understand how the first two issues caused problems.
The first issue that hurt the trucking industry was the emission standards that were implemented throughout this decade. The four tiered improvement in emissions required companies to invest heavily in research and development. Millions upon millions were spent on researching how to create the modern truck that had power without producing the noxious emissions so many came to associate with trucking.
The emissions research was costly, but would not have hurt the manufacturers because they would have recovered the costs in new truck sales. Our second issue put a scuttle on that. The Great Recession was a kick to the privates for nearly all of us and the trucking industry was no different. Truck sales from 2006 on fell to laughable levels, which has kept the trucking companies from recovering the costs incurred in creating the technology.
The fuel standards mandated by President Obama are not necessarily a bad thing. Fuel prices are going to rise like mad in the future, so better mileage is ultimately a good thing. The problem is the trucking companies have not recovered their costs from the research and development on emissions improvements. Asking them to spend massively again on research and development to increase mileage figures is asking for a huge capital expenditure by a lot of them. Many simply don’t have the money to do it, which means we could see mergers and failures in the long run.