U.S. Department
of Transportation

National Highway
Traffic Safety
Administration

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Automotive Fuel
Economy Program

Annual Update
Calendar Year 2003

This publication is distributed by the U.S. Department of Transportation, National Highway Traffic Safety Administration, in the interest of information exchange. The opinions, findings, and conclusions expressed in this publication are those of the author(s) and not necessarily those of the U.S. Department of Transportation or National Highway Traffic Safety Administration. The United States Government assumes no liability for its content or use thereof. If trade or manufacturer’s names or products are mentioned, it is because they are considered essential to the object of the publication and should not be construed as an endorsement. The United States Government does not endorse products or manufacturers.

AUTOMOTIVE FUEL ECONOMY PROGRAM

ANNUAL UPDATE

CALENDAR YEAR 2003

TABLE OF CONTENTS

SECTION I : INTRODUCTION

SECTION II : VEHICLE FUEL ECONOMY PERFORMANCE AND CHARACTERISTICS

1. Fuel Economy Performance by Manufacturer

2. Characteristics of the MY 2003 Passenger Car Fleet

3. Characteristics of the MY 2003 Light Truck Fleet

4. Passenger Car and Light Truck Fleet Economy Averages

5. Domestic and Import Fleet Fuel Economy Averages

SECTION III : RECENT ACTIVITIES

1. Light Truck CAFE Standards

2. Low Volume Petitions

3. Enforcement

4. Carryback/Carryforward Plans

5. Manufacturing Incentives for Alternative Fuel Vehicles

6. Denial of Petition for Rulemaking: Code of Federal Regulations Bluewater Network

7. Reforming the Automobile Fuel Economy Standards Program

8. Nissan Two-Fleet Rule Exemption

SECTION I: INTRODUCTION

The Automotive Fuel Economy Program Annual Update summarizes the fuel economy performance of the vehicle fleet during 2003, and the activities of the National Highway Traffic Safety Administration (NHTSA) to date. Included in this report is a section summarizing current rulemaking activities to date. .

The Secretary of Transportation is required to administer a program for regulating the fuel economy of new passenger cars and light trucks in the United States market. The authority to administer the program was delegated by the Secretary to the Administrator of NHTSA, 49 C.F.R. 1.50(f).

NHTSA's responsibilities in the fuel economy area include:

1. establishing and amending average fuel economy standards for manufacturers of passenger cars and light trucks, as necessary;

2. promulgating regulations concerning procedures, definitions, and reports necessary to support the fuel economy standards;

3. considering petitions for exemption from established fuel economy standards by low volume manufacturers (those producing fewer than 10,000 passenger cars annually worldwide) and establishing alternative standards for them;

4. enforcing fuel economy standards and regulations; and

5. responding to petitions concerning domestic production by foreign manufacturers, and other matters.

Passenger car fuel economy standards were established by Congress for Model Year (MY) 1985 and thereafter at a level of 27.5 miles per gallon (mpg). NHTSA is authorized to amend the standard above or below that level. The agency has established light truck standards each year, but Congress mandated through the DOT Appropriations Acts for fiscal years 1996 through 2001, no increase from the MY 1996 value of 20.7 mpg for MYs 1998 through 2003. The Congressional freeze on CAFE standards was repealed in mid-December 2001. Given the short lead-time (CAFE standards must be set 18 months prior to the affected model year), in April 2002, the agency set the MY 2004 light truck standard at 20.7 mpg. All fuel economy standards through MY 2007 are listed in Table I -1.

Corporate Average Fuel Economy (CAFE) is the sales weighted average fuel economy, expressed in mpg, of a manufacturer’s fleet of passenger cars or light trucks with a gross vehicle weight rating (GVWR) of 8,500 lbs. or less, manufactured for sale in the United States, for any given model year. Fuel economy is defined as the average mileage traveled by an automobile per gallon of gasoline (or equivalent amount of other fuel) consumed as measured in accordance with the testing and evaluation protocol set forth by Environmental Protection Agency (EPA).

Manufacturers perform their own fuel economy tests of new car models and submit the results to EPA. EPA is responsible for conducting its own tests or verifying the manufacturers’ dynamometer tests. EPA also is responsible for compiling the production data from manufacturers’ reports and furnishing CAFE results to NHTSA.

Fuel economy test data from the manufacturers and EPA serves as the starting point for both CAFE values and real world fuel economy projections. For CAFE, the test data is adjusted upward to account for any credits for dual fuel and dedicated alternative fuel vehicles, and for passenger cars only, is adjusted upward for credits available to manufacturers to account for test procedure changes since the CAFE program was established. This report presents CAFE values since they are used to determine manufacturer compliance with fuel economy standards.

The Federal government provides real world fuel economy projections to consumers in several ways: on new vehicle labels, in the Fuel Economy Guide, and on EPA and Department of Energy (DOE) websites. The Fuel Economy Guide is published and distributed by DOE based on EPA data. The Fuel Economy Guide lists the city and highway fuel economy estimates that are included on the Fuel Economy label on new vehicles. A downloadable version of the Fuel Economy Guide can be found at http://www.fueleconomy.gov . These estimates are derived from the same dynamometer test values used for CAFE calculation, mentioned above. EPA adjusts these laboratory test results to account for the difference between controlled laboratory conditions and actual driving on the road. The laboratory fuel economy results are adjusted downward to derive the estimates in the Fuel Economy Guide and on new passenger cars and light trucks labels. The city test value is lowered 10 percent and the highway test value is reduced 22 percent. Thus, the city and highway fuel economy estimates used to calculate CAFE differ from the numbers in the Fuel Economy Guide and on the new car and light truck window labels.

1. Standards for MY 1979 light trucks were established for vehicles with a gross vehicle weight rating (GVWR) of 6,000 pounds or less.  Standards for MY 1980 and beyond are for light trucks with a GVWR of 8,500 pounds or less.
2. For MY 1979, light truck manufacturers could comply separately with standards for four-wheel drive, general utility vehicles and all other light trucks, or combine their trucks into a single fleet and comply with the standard of 17.2 mpg.
3.  For MYs 1982-1991, manufacturers could comply with the two-wheel and four-wheel drive standards or could combine all light trucks and comply with the combined standard.
4. Established by Congress in Title V of the Motor Vehicle Information and Cost Savings Act.
5. A manufacturer whose light truck fleet was powered exclusively by basic engines which were not also used in passenger cars could meet standards of 14 mpg and 14.5 mpg in MYs 1980 and 1981, respectively.
6. Revised in June 1979 from 18.0 mpg.
7. Revised in October 1984 from 21.6 mpg for two-wheel drive, 19.0 mpg for four-wheel drive, and 21.0 mpg for combined.
8. Revised in October 1985 from 27.5 mpg.
9. Revised in October 1986 from 27.5 mpg.
10. Revised in September 1988 from 27.5 mpg.

SECTION II: VEHICLE FUEL ECONOMY PERFORMANCE AND CHARACTERISTICS

A.      Fuel Economy Performance by Manufacturer

The fuel economy achievements for domestic and foreign-based manufacturers in MY 2003 were updated to include final EPA calculations, where available, since the publication of the Automotive Fuel Economy Program, Annual Update Calendar Year 2002.  These fuel economy achievements and current projected data for MY 2003 are listed in Tables II-1 and II-2.

Overall fleet fuel economy for passenger cars was 29.5 mpg in MY 2003, an increase of 0.5 mpg above the MY 2002 level.  For MY 2003, CAFE values increased above MY 2002 levels for 12 of 22 passenger car manufacturers' fleets.  (See Table II-1.)  These 12 companies accounted for more than 68 percent of the total MY 2003 production.  Manufacturers continued to introduce new technologies and more fuel-efficient models, and some larger, heavier, or more powerful less fuel-efficient models.  For MY 2003, the overall domestic manufacturers' sales weighted passenger car fleet average CAFE was 29.0 mpg.  For MY 2003, DaimlerChrysler, General Motors, Honda, and Quantum domestic sales weighted passenger car CAFE values rose 2.0 mpg, 0.1 mpg, 2.0 mpg, and 2.2 mpg, respectively, from their MY 2002 levels.  Toyota domestic sales weighted passenger car CAFE values fell 5.5 mpg from its MY 2002 level.  Both Ford and Nissan domestic sales weighted passenger car CAFE  values remained at their MY 2002 levels.  Overall, the domestic manufacturers’ combined sales weighted MY 2003 CAFE decreased 0.1 mpg below the MY 2002 level.

Table II-1

*For MY 2003, DaimlerChrysler and Ford domestic passenger car fleets CAFE levels were 28.8 mpg and 26.7 mpg.  These manufacturers earned CAFE incentives for the sale of alternative fuel vehicles.  These incentives  and EPA adjustments raised their CAFE values to the figures shown above.

**In MY 2003, Daewoo discontinued importing passenger cars to the United States.

*The MY 2003 light truck fuel economy values for DaimlerChrysler, Ford, and General Motors light truck fleets were 21.2 mpg, 20.0 mpg, and 20.1 mpg, respectively.   These manufacturers earned CAFE incentives for the sale of alternative fuel vehicles.  These incentives raised their CAFE values to the figures shown above.

**In MY 2003, both Porsche and Subaru began importing light trucks to the United States.

For MY 2003, the overall import manufacturers’ sales weighted passenger car fleet average CAFE was 29.9 mpg, increasing 1.1 mpg above the MY 2002 level.  Eight of 15 import car manufacturers increased their CAFE values between MYs 2002 and 2003.  BMW, Ford, General Motors, Honda, Kia, Porsche, Toyota, and Volkswagen import sales weighted passenger car CAFE values rose 0.6 mpg, 0.1 mpg, 0.5 mpg, 2.1 mpg, 0.7 mpg, 0.2 mpg, 3.1 mpg, and 0.3 mpg from their MY 2002 levels.  DaimlerChrysler import, Hyundai, Nissan import, and Suzuki CAFE values fell 0.3 mpg, 0.8 mpg, 2.1 mpg, and 0.8 mpg from their MY 2002 levels.  Figure II-1 illustrates the changes in total new passenger car fleet CAFE from MY 1978 to MY 2003.

The total sales weighted light truck fleet CAFE increased 0.3 mpg above the MY 2002 CAFE level of 21.4 mpg (See Table II-2).  For MY 2003, CAFE values increased above MY 2002 levels for five of 12 light truck manufacturers' fleets.  These five companies accounted for more than 48 percent of the total MY 2003 production.  Manufacturers continued to introduce new technologies, and more fuel-efficient models and some heavier or more powerful fuel-efficient models.  For MY 2003, DaimlerChrysler, Ford, Isuzu, Nissan, and Volkswagen sales weighted light truck CAFE values rose 0.7 mpg, 0.6 mpg, 1.3 mpg, 1.2 mpg, and 0.7 mpg, respectively, from their MY 2002 levels.  BMW, General Motors, Honda, Hyundai, Kia, and Toyota sales weighted light truck CAFE values fell 0.1 mpg, 0.1 mpg, 0.7 mpg, 0.1 mpg, 1.7 mpg, and 0.2 mpg from their MY 2002 levels.  Suzuki sales weighted light truck CAFE value remained at its MY 2002 level.  Overall, the total manufacturers’ combined sales weighted light truck fleet MY 2003 CAFE value was 21.7 mpg.  Figure II-2 illustrates the trends in total light truck fleet CAFE from MY 1979 to MY 2003.

Six passenger car (BMW, DaimlerChrysler import, Ferrari/Maserati, Lotus, Nissan import, and Porsche) and three light truck manufacturers (BMW, Kia, and Porsche) are projected to fail to achieve the levels of the MY 2003 CAFE standards.  In addition, several manufacturers   

are not expected to pay civil penalties because the credits they earned by exceeding the fuel economy standards in earlier years offset later shortfalls.  Other manufacturers may file either a carryback plan or a carryforward plan to demonstrate that they anticipate earning credits in future model years or have earned credits in previous model years to offset current deficits.

CAFE levels may be impacted because of changes made to a manufacturer’s vehicle fleet.  Changes that occur such as an increase or decrease in vehicle weights, manufacturer’s use of materials like high- and medium-strength steel, plastic and plastic composites, or aluminum to build its vehicles, market-mix shifts due to changes in consumer demand, and the use of advanced technology may potentially impact CAFE levels.

B.      Characteristics of the MY 2003 Passenger Car Fleet

Overall, the MY 2003 passenger car fleet reflects a continuing trend toward satisfying consumer preference for heavier cars.  (See Table II-3.)  Compared with MY 2002, the average curb weight for MY 2003 decreased by 12 pounds for the domestic fleet and increased by 56 pounds for the import fleet.  The average curb weight of all passenger cars increased from 3,163 pounds in MY 2002 to 3,179 pounds in MY 2003, primarily because of the average curb weight increase for the import fleet.  Average engine displacement increased from 174 to 179 cubic inches for domestic passenger cars and decreased from 152 to 150 cubic inches for import passenger cars from MY 2002 to MY 2003.  Overall, the average engine displacement remained stable at 166 cubic inches.  From MY 2002 to MY 2003, horsepower/100 pounds, a measure of

 Table II-3

*Includes associated station wagons.

vehicle performance, increased from 5.43 to 5.48 for domestic passenger cars and from 5.38 to 5.50 for import passenger cars.  The total fleet average for passenger cars increased from 5.42 horsepower/100 pounds in MY 2002 to 5.49 in MY 2003.  The passenger car fleet in MY 2003 average the highest horsepower-to-weight ratio recorded in any year since 1955, the earliest year for which the agency has data.

The size/class breakdown shows an increase in two-seater, minicompact, compact, and large passenger cars, and a decrease in subcompact and mid-size passenger cars for the overall fleet.  The size/class mix in the domestic fleet showed an increase in minicompact and large passenger cars and a decrease in subcompact, compact and mid-size passenger cars.  The size/class mix in the import fleet showed an increase in two-seater, compact, mid-size, and large passenger cars and a decrease in minicompact and subcompact passenger cars.  The import share of the passenger car market increased 11.3 percentage points in MY 2003 to over 46 percent of the market.

The domestic fleet rose above its MY 2002 level in the share of turbocharged and supercharged engines.  Diesel engines were only offered on certain Mercedes and Volkswagen models during MY 2003.  Consequently, diesel engine share decreased in MY 2003. 

Passenger car fleet average characteristics have changed significantly since MY 1978 (the first year of fuel economy standards). (See Table II-4.)  After an initial trend in weight loss (from MY 1978 to MY 1982, the average passenger car fleet curb weight decreased from 3,349 to 2,808 pounds), the curb weight stabilized between 2,800 and 3,179 pounds.  However, since

MY 1993, the average passenger car fleet curb weight has steadily increased and has reached a level only exceeded by the initial two years of the CAFE program.  The average horsepower to weight ratio (hp/100 lb.) of the passenger car fleet has increased each year since 1981.  The average horsepower to weight ratio for MY 2003 passenger car was 5.49, compared to the average of 3.43 in MY 1981.  Table II-4 shows that the MY 2003 passenger car fleet has nearly equal interior volume and more than 47 percent better CAFE than the MY 1978 fleet.  (See Figure II-3.) 

C.      Characteristics of the MY 2003 Light Truck Fleet

The characteristics of the MY 2003 light truck fleet are shown in Table II-5.  Unlike passenger cars, light truck manufacturers are not required to divide their fleets into domestic and import fleets.  For comparison purposes, Table II-5 subdivides the light truck fleet into two-wheel drive and four-wheel drive classifications.

The MY 2003 average equivalent test weight of the total light truck fleet increased by 62 pounds over that for MY 2002.  The average CAFE of the fleet increased by 0.3 mpg to 21.7 mpg.  The share of the MY 2003 two-wheel drive fleet decreased by 0.3 percentage points below the MY 2002 level of 52.9 percent; thus the share of the MY 2003 four-wheel drive fleet increased by 0.3 percentage points above the MY 2002 level of 47.1 percent.

The size/class breakdown shows small increases in small pickup, large pickup (four-wheel drive), and special purpose (both two-wheel drive and four-wheel drive) vehicles, and small reductions in passenger vans, and large pickups (two-wheel drive) vehicles for the overall fleet.  The size/class mix in the two-wheel drive showed an increase in small pickup, special purpose vehicles and a decrease in passenger van, and large pickup vehicles, while cargo van vehicles remained stable.  The size/class mix in the four-wheel drive showed an increase in cargo van and large pickup and a decrease in passenger van and special purpose vehicles.

Table II-5

Historically, light truck fuel economy levels increased from 18.5 mpg in MY 1980 to 21.7 mpg in MY 1987.  From 1988 until 2002, fuel economy stabilized at around 21.0 mpg (see Table II-6).  Subsequently, in MY 2003, light truck fuel economy level increased to 21.7 mpg, increasing to its highest level since 1987.  Light truck production increased from 1.9 million units in MY 1980 to over 7.9 million units in MY 2003.  Light trucks comprised over 50 percent of the total light duty vehicle fleet production in MY 2003, over 4 times more than its share in MY 1980.

The size/class breakdown shows small increases in small pickup, large pickup (four-wheel drive), and special purpose (both two-wheel drive and four-wheel drive) vehicles, and small reductions in passenger vans, and large pickups (two-wheel drive) vehicles for the overall fleet. 

The size/class mix in the two-wheel drive showed an increase in small pickup, special purpose vehicles and a decrease in passenger van, and large pickup vehicles, while cargo van vehicles remained stable.  The size/class mix in the four-wheel drive showed an increase in cargo van and large pickup and a decrease in passenger van and special purpose vehicles.

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 2003, passenger car CAFE exceeded to a high of 29.5 mpg, the greatest level ever recorded.  Light truck CAFE increased from 18.5 mpg in 1980 to a high of 21.7 mpg in 1987.  In MY 2003, the light truck average achieved 21.7 mpg, increasing to its highest CAFE level in 17 years.

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 25.0 mpg in MY 2003.  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 2003, the domestic passenger car fleet average CAFE improved to 29.0 mpg.  The import passenger car fleet average CAFE was 29.8 mpg.  Compared with MY 1978, this reflects an increase of 10.3 mpg for domestic cars and 2.5 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 passenger cars and light trucks to the market.

Table II-6