The Economic Implications of Potential NHTSA and EPA Regulatory Revisions on U.S. Light Truck Sales and Manufacturing

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While there are regulatory provisions that offer some compliance flexibility through credits, credit banking and trading, and technology incentives, it is not at all certain that vehicle manufacturers will meet the regulatory targets for light trucks. With real fuel prices nearing historic lows—and projected by the U.S. Energy Information Administration to stay low through 2025—U.S. regulators must take care during the ongoing mid-term review to set realistic and achievable standards for light trucks. Anything that could dampen the market for light trucks that consumers want to buy would result in large economic and financial impacts in the United States.

Every job in a body-on-frame pickup truck plant or related powertrain plant supports another 14.9 jobs in the U.S. economy, and every light truck sold in the United States generates an average of $6,000 in operating profit for the manufacturers. The economic and financial consequences of stricter light truck regulations would be especially large at FCA, Ford, and GM—companies that have a sales mix that is currently at 72 percent light trucks, and a manufacturing mix that is 76 percent light trucks. However, lower truck sales would not only impact these three automakers, but also BMW, Daimler, Honda, Hyundai-Kia, Renault/Nissan, Subaru, Tesla, and Toyota and the large, long, and heavily U.S.-based supply chain that is completely interdependent in its support of all light truck manufacturing in the United States.