[Federal Register Volume 63, Number 64 (Friday, April 3, 1998)]
[Notices]
[Pages 16617-16628]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-8410]


-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration


Automotive Fuel Economy Program; Report to Congress

    The attached document Automotive Fuel Economy Program, Twenty-
Second Annual Report to Congress, was prepared pursuant to 49 U.S.C. 
32916 et seq. which requires that ``the Secretary shall transmit to 
each House of Congress, and publish in the Federal Register, a review 
of the average fuel economy standards under this part.''

    Issued on: March 26, 1998.
L. Robert Shelton,
Associate Administrator for Safety Performance Standards.

Automotive Fuel Economy Program

Twenty-Second Annual Report to Congress

Calendar Year 1997
    This publication is distributed by the United States 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 Department of Transportation or the 
National Highway Traffic Safety Administration. The United States 
Government assumes no liability for its contents or use thereof. If 
trade or manufacturers' name 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.

Table of Contents

Section I: Introduction
Section II: Fuel Economy Improvement by Manufacturers
    A. Fuel Economy Performance by Manufacturer
    B. Characteristics of the MY 1997 Passenger Car Fleet
    C. Characteristics of the MY 1997 Light Truck Fleet
    D. Passenger Car and Light Truck Fleet Economy Averages
    E. Domestic and Import Fleet Fuel Economy Averages
Section III: 1997 Activities
    A. Light Truck CAFE Standards
    B. Low Volume Petitions
    C. Enforcement
    D. Carryback Plans
    E. Contract Activities

Section I: Introduction

    The Twenty-second Annual Report to Congress on the Automotive Fuel 
Economy Program summarizes the activities of the National Highway 
Traffic Safety Administration (NHTSA) during 1997, in accordance with 
49 U.S.C. 32916 et seq., which requires the submission of a report each 
year. Included in this report is a section summarizing rulemaking 
activities during 1997.
    The Secretary of Transportation is required to administer a program 
for regulating the fuel economy of new passenger cars and light trucks 
in the

[[Page 16618]]

United States market. The authority to administer the program was 
delegated by the Secretary to the Administrator of NHTSA, 49 CFR 
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) Preparing reports to Congress annually on the fuel economy 
program;
    (5) Enforcing fuel economy standards and regulations; and
    (6) 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. Standards for light trucks were established by NHTSA for 
MYs 1979 through 1999. NHTSA set a combined standard of 20.7 mpg for 
light truck fleets for MY 1999. All current standards are listed in 
Table I-1.

                     Table I-1.--Fuel Economy Standards for Passenger Cars and Light Trucks                     
                                    [Model Years 1978 through 1999 (in MPG)]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                 Light trucks \1\               
                                                                ------------------------------------------------
                   Model year                    Passenger cars     Two-wheel      Four-wheel                   
                                                                      drive           drive       Combined \2\, 
-------------------------------------------------------------------------------------------------------\3\------
1978...........................................        \4\ 18.0  ..............  ..............  ...............
1979...........................................        \4\ 19.0            17.2            15.8  ...............
1980...........................................        \4\ 20.0            16.0            14.0            (\5\)
1981...........................................            22.0        \6\ 16.7            15.0            (\5\)
1982...........................................            24.0            18.0            16.0             17.5
1983...........................................            26.0            19.5            17.5             19.0
1984...........................................            27.0            20.3            18.5             20.0
1985...........................................        \4\ 27.5        \7\ 19.7        \7\ 18.9         \7\ 19.5
1986...........................................        \8\ 26.0            20.5            19.5             20.0
1987...........................................        \9\ 26.0            21.0            19.5             20.5
1988...........................................        \9\ 26.0            21.0            19.5             20.5
1989...........................................       \10\ 26.5            21.5            19.0             20.5
1990...........................................        \4\ 27.5            20.5            19.0             20.0
1991...........................................        \4\ 27.5            20.7            19.1             20.2
1992...........................................        \4\ 27.5  ..............  ..............             20.2
1993...........................................        \4\ 27.5  ..............  ..............             20.4
1994...........................................        \4\ 27.5  ..............  ..............             20.5
1995...........................................        \4\ 27.5  ..............  ..............             20.6
1996...........................................        \4\ 27.5  ..............  ..............             20.7
1997...........................................        \4\ 27.5  ..............  ..............             20.7
1998...........................................        \4\ 27.5  ..............  ..............             20.7
1999...........................................        \4\ 27.5  ..............  ..............             20.7
----------------------------------------------------------------------------------------------------------------
\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 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: Fuel Economy Improvement By Manufacturers

A. Fuel Economy Performance by Manufacturer

    The fuel economy achievements for domestic and foreign-based 
manufacturers in MY 1996 were updated to consider final production 
figures, where available, since the publication of the Twenty-first 
Annual Report to the Congress. These fuel economy achievements and 
current projected data for MY 1997 are listed in Tables II-1 and II-2.
    Overall fleet fuel economy for passenger cars was 28.6 mpg in MY 
1997, a decrease of 0.1 mpg from the MY 1996 level. For MY 1997, 
Corporate Average Fuel Economy (CAFE) values increased above MY 1996 
levels for ten of 24 passenger car manufacturers' fleets. (See Table 
II-1.) These ten companies accounted for more than 39 percent of the 
total MY 1997 production. Manufacturers continued to introduce new 
technologies and more fuel-efficient models, and some larger, less 
fuel-efficient models. For MY 1997, the overall domestic manufacturers' 
fleet average fuel economy was 27.9 mpg. For MY 1997, Ford, Mazda, and 
Toyota domestic passenger car CAFE values rose 0.3 mpg, 0.5 mpg, and 
0.5 mpg from their 1996 levels, while Chrysler, General Motors, and 
Honda

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fell 0.1 mpg, 0.1 mpg, and 3.3 mpg, respectively, from their MY 1996 
levels. Overall, the domestic manufacturers' combined CAFE decreased 
0.4 mpg below MY 1996 level.

  Table II-1.--Passenger Car Fuel Economy Performance By Manufacturer*  
                       [Model years 1996 and 1997]                      
------------------------------------------------------------------------
                                                        Model Year CAFE 
                                                             (MPG)      
                    Manufacturer                     -------------------
                                                        1996      1997  
------------------------------------------------------------------------
Domestic:                                                               
  Chrysler..........................................      27.6      27.5
  Ford..............................................      26.8      27.1
  General Motors....................................      28.3      28.2
  Honda.............................................      33.2      29.9
  Mazda.............................................      29.8      30.3
  Toyota............................................      28.3      28.8
Sales Weighted Average (Domestic)...................      28.3      27.9
Import:                                                                 
  BMW...............................................      27.3      25.7
  Chrysler Imports..................................      28.2      26.4
  Fiat..............................................      13.8      13.5
  Ford Imports......................................      31.5      30.9
  GM Imports........................................      35.8      31.3
  Honda.............................................      27.8      34.4
  Hyundai...........................................      32.9      30.9
  Kia...............................................      29.0      30.6
  Mazda.............................................      32.7      31.3
  Mercedes-Benz.....................................      25.1      24.9
  Mitsubishi........................................      29.9      30.0
  Nissan............................................      30.4      29.9
  Porsche...........................................      21.5      22.0
  Subaru............................................      27.7      28.0
  Suzuki............................................      34.0      33.9
  Toyota............................................      29.8      30.2
  Volvo.............................................      26.1      25.8
  Volkswagen........................................      28.2      28.6
Sales Weighted Average (Import).....................      29.7      29.8
    Total Fleet Average.............................      28.7      26.6
    Fuel Economy Standards..........................      27.5      27.5
------------------------------------------------------------------------
*Manufacturers with low volume alternate fuel economy standards are not 
  listed                                                                


    Table II-2.--Light Truck Fuel Economy Performance by Manufacturer   
                       [Model Years 1996 and 1997]                      
------------------------------------------------------------------------
                                                        Model year CAFE 
                                                        (MPG) Combined  
                    Manufacturer                     -------------------
                                                        1996      1997  
------------------------------------------------------------------------
Domestic:                                                               
  Chrysler..........................................      20.3      20.2
  Ford..............................................      20.6      20.0
  General Motors....................................      20.7      20.2
Sales Weighted Average (Domestic)...................      20.5      20.1
Import:                                                                 
  Honda.............................................       (*)      27.1
  Isuzu.............................................      19.5      19.4
  Kia...............................................      23.4      23.8
  Land Rover........................................      17.2      17.2
  Mazda.............................................      21.2      20.5
  Mitsubishi........................................      19.1      22.3
  Nissan............................................      23.0      22.1
  Suzuki............................................      27.5      27.4
  Toyota............................................      23.2      22.6
  Volkswagen........................................       (*)      18.5
Sales Weighted Average (Import).....................      22.1      22.1
    Total Fleet Average.............................      20.7      20.4
    Fuel Economy Standards..........................      20.7     20.7 
------------------------------------------------------------------------
* Honda and Volkswagen did not produce light trucks for MY 1996.        

    In MY 1997, the fleet average fuel economy for import passenger 
cars increased by 0.1 mpg from the MY 1996 CAFE level to 29.8 mpg. 
Seven of the 18 import car manufacturers increased their CAFE values 
between MYs 1996 and 1997. Figure II-1 illustrates the changes in total 
new passenger car fleet CAFE from MY 1978 to MY 1997.
    The total light truck fleet CAFE decreased 0.3 mpg below the MY 
1996 CAFE level of 20.7 mpg (see Table II-2). Figure II-2 illustrates 
the trends in total light truck fleet CAFE from MY 1979 to MY 1997.
    Several passenger car and light truck manufacturers are projected 
to fail to achieve the levels of the MY 1997 CAFE standards. However, 
NHTSA is not yet able to determine which of these manufacturers may be 
liable for civil penalties for non-compliance. Some MY 1997 CAFE values 
may change when final figures are provided to NHTSA by EPA, in mid-
1998. 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 carryback plans to demonstrate that they anticipate earning 
credits in future model years to offset current deficits.

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B. Characteristics of the MY 1997 Passenger Car Fleet

    The characteristics of the MY 1997 passenger car fleet reflect a 
continuing trend toward satisfying consumer demand for higher 
performance cars. (See Table II-3.) From MY 1996 to MY 1997, 
horsepower/100 pounds, a measure of vehicle performance, increased from 
5.00 to 5.02 for domestic passenger cars and from 4.76 to 4.82 for 
import passenger cars. The total fleet average for passenger cars 
increased from 4.93 horsepower/100 pounds in MY 1996 to 4.95 in MY 
1997. Compared with MY 1996, the average curb weight for MY 1997 
increased by 32 pounds for the domestic fleet and 39 pounds for the 
import fleet. The total new passenger car fleet average weight 
increased from 3,049 pounds in MY 1996 to 3,071 pounds in MY 1997. 
Average engine displacement increased from 178 to 180 cubic inches for 
domestic passenger cars and from 134 to 135 cubic inches for import 
passenger cars, from MY 1996 to MY 1997.
    The 0.4 mpg fuel economy decline for the MY 1997 domestic passenger 
car fleet may be attributed in part to an increase in average weight, 
mix shifts, and an increase in the use of automatic transmissions.
    The size/class breakdown shows an increased trend primarily toward 
subcompact and mid-size passenger cars with the reduction of compact 
passenger cars for the overall fleet. The size/class mix in the 
domestic fleet shifted from compact passenger cars to subcompact, mid-
size, and large passenger cars. The size/class mix in the import fleet 
shifted from compact and mid-size passenger cars to two-seater, 
minicompact, subcompact, and large passenger cars. The import share of 
the passenger car market increased by 6.4 percentage points in MY 1997.

                     Table II-3.--Passenger Car Fleet Characteristics For MYs 1996 and 1997                     
----------------------------------------------------------------------------------------------------------------
                                      Total fleet               Domestic fleet               Import fleet       
       Characteristics       -----------------------------------------------------------------------------------
                                  1996          1997          1996          1997          1996          1997    
----------------------------------------------------------------------------------------------------------------
Fleet Average Fuel Economy,                                                                                     
 mpg........................         28.7          28.6          28.3          27.9          29.7          29.8 
Fleet Average Curb Weight,                                                                                      
 lbs........................       3049          3071          3111          3143          2905          2944   
Fleet Average Engine                                                                                            
 Displacement, cu. in.......        165           164           178           180           134           135   
Fleet Average Horsepower/                                                                                       
 Weight ratio, HP/100 lbs...                                                                                    
  ..........................          4.93          4.95          5.00          5.02          4.76          4.82
Percent of Fleet............        100           100            70.0          63.6          30.0          36.4 
----------------------------------------------------------------------------------------------------------------
                                       Segmentation by EPA Size Class, %                                        
----------------------------------------------------------------------------------------------------------------
Two-Seater..................          0.9           1.0           0.5           0.3           2.0           2.3 
Minicompact.................          0.4           0.6           0.0           0.0           1.5           1.6 
Subcompact *................         11.0          17.6           6.4           7.2          21.6          35.9 
Compact *...................         44.7          37.4          44.7          39.3          44.5          33.9 
Mid-Size *..................         29.6          30.3          29.7          33.3          29.5          25.2 
Large *.....................         13.4          13.1          18.7          19.9           0.9           1.2 
Diesel Engines..............          0.10          0.08          0.0           0.0           0.3           0.2 
Turbo or Supercharged                                                                                           
 Engines....................          1.1           1.5           0.5           1.3           2.3           1.8 
Fuel Injection..............        100           100           100           100           100           100   
Front-Wheel Drive...........         86.0          85.8          86.9          87.8          84.1          82.2 
Automatic Transmissions.....         84.7          86.1          88.5          91.4          76.1          77.0 
Automatic Transmissions with                                                                                    
 Lockup Clutches............         97.9          97.7         100           100            92.1          93.1 
Automatic Transmissions with                                                                                    
 Four or more Forward Speeds         88.8          92.1          89.0          90.6          88.1          95.2 
----------------------------------------------------------------------------------------------------------------
* Includes associated station wagons.                                                                           

    The domestic fleet rose above its MY 1996 level in the share of 
turbocharged and supercharged engines, while there was a reduction in 
such engines in the import fleet. Diesel engine shares decreased 
slightly in MY 1997, and diesels were offered by two manufacturers, 
Mercedes-Benz and Volkswagen.
    Passenger car fleet average characteristics have changed 
significantly since MY 1978 (the first year of fuel economy standards). 
(See Table II-4.) After substantial initial 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 has increased in 9 of the past 
10 model years, reaching 3,071 lbs in MY 1997. This is the highest 
value of any year since MY 1979. Table II-4 shows that the MY 1997 
passenger car fleet has nearly equal interior volume and higher 
performance, but with more than 43 percent better fuel economy, than 
the MY 1978 fleet. (See Figure II-3.)

C. Characteristics of the MY 1997 Light Truck Fleet

    The characteristics of the MY 1997 light truck fleet are shown in 
Table II-5. Light truck manufacturers are not required to divide their 
fleets into domestic and import fleets based on the 75-percent domestic 
content threshold used for passenger car fleets. The light truck fleet 
is categorized according to two-wheel drive or four-wheel drive.

[[Page 16623]]



                          Table II-4.--New Passenger Car Fleet Average Characteristics                          
                                             [Model Year 1978-1997]                                             
----------------------------------------------------------------------------------------------------------------
                                                     Fuel                    Interior                Horsepower/
                  Model years                      economy    Curb weight  space  (cu.  Engine size  weight  (hp/
                                                    (mpg)         (lb.)        ft.)      (cu. in.)     100 lb.) 
----------------------------------------------------------------------------------------------------------------
1978...........................................         19.9         3349          112          260         3.68
1979...........................................         20.3         3180          110          238         3.72
1980...........................................         24.3         2867          105          187         3.51
1981...........................................         25.9         2883          108          182         3.43
1982...........................................         26.6         2808          107          173         3.47
1983...........................................         26.4         2908          109          182         3.57
1984...........................................         26.9         2878          108          178         3.66
1985...........................................         27.6         2867          108          177         3.84
1986...........................................         28.2         2821          106          169         3.89
1987...........................................         28.5         2805          109          162         3.98
1988...........................................         28.8         2831          108          161         4.11
1989...........................................         28.4         2879          109          163         4.28
1990...........................................         28.0         2906          108          163         4.53
1991...........................................         28.4         2934          108          164         4.42
1992...........................................         27.9         3007          108          169         4.56
1993...........................................         28.4         2971          109          164         4.62
1994...........................................         28.3         3011          109          169         4.79
1995...........................................         28.6         3047          109          166         4.87
1996...........................................         28.7         3049          109          165         4.93
1997...........................................         28.6         3071          109          164         4.95
----------------------------------------------------------------------------------------------------------------


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                      Table II-5.--Light Truck Fleet Characteristics for MYS 1996 and 1997                      
----------------------------------------------------------------------------------------------------------------
                                      Total fleet               Two-wheel drive            Four-wheel drive     
       Characteristics       -----------------------------------------------------------------------------------
                                  1996          1997          1996          1997          1996          1997    
----------------------------------------------------------------------------------------------------------------
Fleet Average Fuel Economy,                                                                                     
 mpg........................         20.7          20.4          21.9          21.7          19.3          19.0 
Fleet Average Equivalent                                                                                        
 Test Weight, lbs...........       4351          4471          4195          4283          4602          4703   
Fleet Average Engine                                                                                            
 Displacement, cu. in.......        244           249           230           235           266           266   
Fleet Average Horsepower/                                                                                       
 Weight ratio, HP/100 lbs...          4.07          4.20          3.99          4.18          4.20          4.23
Percent of Fleet............        100           100            61.7          55.3          38.3          44.7 
Percent of Fleet from                                                                                           
 Foreign-based Manufacturers         12.1          14.2           8.7           9.6          17.7          19.8 
----------------------------------------------------------------------------------------------------------------
                                             Segmentation by Type, %                                            
----------------------------------------------------------------------------------------------------------------
Passenger Van...............         22.6          16.4          35.4          28.1           1.3           1.9 
Cargo Van...................          3.8           3.9           6.0           6.9           0.2           0.3 
Small Pickup:                                                                                                   
    Two-Wheel Drive.........          7.2           6.0          11.7          10.8   ............  ............
    Four-Wheel Drive........  ............  ............  ............  ............  ............  ............
Large Pickup:                                                                                                   
    Two-Wheel Drive.........         19.2          20.8          31.5          37.6   ............  ............
    Four-Wheel Drive........         10.9          14.8   ............  ............         28.5          33.1 
Special Purpose:                                                                                                
    Two-Wheel Drive.........          9.4           9.2          15.3          16.6   ............  ............
    Four-Wheel Drive........         26.8          28.9   ............  ............         70.0          64.7 
Diesel Engines..............          0.07          0.03          0.04          0.01          0.12          0.04
Turbo/Supercharged Engines..          0.07          0.11          0.04          0.13          0.12          0.10
Fuel Injection..............        100           100           100           100           100           100   
Automatic Transmissions.....         84.2          85.1          81.9          83.1          87.9          87.7 
Automatic Transmissions with                                                                                    
 Lockup Clutches............         98.9          99.5          98.1          99.1         100           100   
Automatic Transmission with                                                                                     
 Four or More Forward Speeds         93.8          95.1          89.7          92.2          99.4          98.5 
----------------------------------------------------------------------------------------------------------------

    The MY 1997 average test weight of the total light truck fleet 
increased by 120 pounds over that for MY 1996. The average fuel economy 
of the fleet decreased by 0.3 mpg to 20.4 mpg. Diesel engine usage 
decreased in light trucks to 0.03 percent in MY 1997 from 0.07 percent 
in MY 1996. The four-wheel drive share of the MY 1997 fleet increased 
by 6.4 percentage points over that for the MY 1996 level of 38.3 
percent.
    CAFE levels for light trucks in the 0-8,500 pounds gross vehicle 
weight (GVW) class increased from 18.5 mpg in MY 1980 to 21.7 mpg in MY 
1987, before declining to 20.4 mpg in MY 1997, influenced by an 
increase in average weight, engine size, and performance. Light truck 
production increased from 1.9 million in MY 1980 to 6.1 million in MY 
1997. Light trucks comprised 43 percent of the total light duty vehicle 
fleet production in MY 1997, 2.5 times the share in MY 1980.

D. Passenger Car and Light Truck Fleet Economy Averages

    Figure II-4 illustrates an increase in the light duty fleet 
(combined passenger cars and light trucks) average fuel economy through 
MY 1987, followed by a gradual decline. (See also Table II-6.) 
Passenger car average fuel economy remained relatively constant for MYs 
1987-1997. The overall decline in fuel economy illustrates the growing 
influence of light trucks and their significant impact on the light 
duty fleet.
    Both passenger car and light truck fleet fuel economies decreased 
from MY 1996 to MY 1997 by 0.1 mpg and 0.3 mpg, respectively, 
contributing to the decline of the total fleet fuel economy for MY 1997 
to 24.4 mpg. The shift to light trucks for general transportation is an 
important trend in consumers' preference and has a significant fleet 
fuel consumption effect.

E. Domestic and Import Fleet Fuel Economy Averages

    Domestic and import passenger car fleet average fuel economies have 
improved since MY 1978, although the increase is far more dramatic for 
the domestic fleet. In MY 1997, the domestic passenger car fleet 
average fuel economy decreased from the MY 1996 level to 27.9 mpg. 
Import passenger car fleet average fuel economy increased slightly from 
MY 1996 to 29.8 mpg. Compared with MY 1978, this reflects an increase 
of 9.2 mpg for domestic cars and 2.5 mpg for import cars.
    Since MY 1980, the total light truck fleet average fuel economy and 
the average for domestic light truck manufacturers have improved 
overall, but both have remained below the fuel economy level for the 
import light truck fleet. The import light truck average fuel economy 
has decreased significantly since its highest level of 27.4 mpg for MY 
1981 to 22.1 mpg for MY 1997. For MY 1997, the domestic light truck 
fleet has an average fuel economy level of 20.1 mpg, which is 2.0 mpg 
lower than the import light truck fleet. For MY 1997, the import light 
truck fleet fuel economy remains at the MY 1996 level of 22.1 mpg. The 
domestic manufacturers continued to dominate the light truck market, 
comprising 85 percent of the total light truck fleet.

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                     Table II-6.--Domestic and Import Passenger Car and Light Truck Fuel Economy Averages for Model Years 1978-1997                     
                                                                        (In mpg)                                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Domestic                          Import                                                 Light  
                                           ------------------------------------------------------------------                                    truck  
                Model year                                                                                     All cars  All light    Total     share of
                                               Car       Light     Combined     Car       LIght     Combined               trucks     fleet      fleet  
                                                         truck                            truck*                                               (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1978......................................       18.7  .........  .........       27.3  .........  .........       19.9  .........  .........  .........
1979......................................       19.3       17.7       19.1       26.1       20.8       25.5       20.3       18.2       20.1        9.8
1980......................................       22.6       16.8       21.4       29.6       24.3       28.6       24.3       18.5       23.1       16.7
1981......................................       24.2       18.3       22.9       31.5       27.4       30.7       25.9       20.1       24.6       17.6
1982......................................       25.0       19.2       23.5       31.1       27.0       30.4       26.6       20.5       25.1       20.1
1983......................................       24.4       19.6       23.0       32.4       27.1       31.5       26.4       20.7       24.8       22.5
1984......................................       25.5       19.3       23.6       32.0       26.7       30.6       26.9       20.6       25.0       24.4
1985......................................       26.3       19.6       24.0       31.5       26.5       30.3       27.6       20.7       25.4       25.9
1986......................................       26.9       20.0       24.4       31.6       25.9       29.8       28.2       21.5       25.9       28.6
1987......................................       27.0       20.5       24.6       31.2       25.2       29.6       28.5       21.7       26.2       28.1
1988......................................       27.4       20.6       24.5       31.5       24.6       30.0       28.8       21.3       26.0       30.1
1989......................................       27.2       20.4       24.2       30.8       23.5       29.2       28.4       20.9       25.6       30.8
1990......................................       26.9       20.3       23.9       29.9       23.0       28.5       28.0       20.8       25.4       30.1
1991......................................       27.3       20.9       24.4       30.1       23.0       28.4       28.4       21.3       25.6       32.2
1992......................................       27.0       20.5       23.8       29.2       22.7       27.9       27.9       20.8       25.1       32.9
1993......................................       27.8       20.7       24.2       29.6       22.8       28.1       28.4       21.0       25.2       37.4
1994......................................       27.5       20.5       23.5       29.6       22.0       27.7       28.3       20.7       24.7       40.2
1995......................................       27.7       20.3       23.8       30.3       21.5       27.9       28.6       20.5       24.9       37.4
1996......................................       28.3       20.5       24.1       29.7       22.1       27.7       28.7       20.8       24.9       39.4
1997......................................       27.9       20.1       23.4       29.8       22.1       27.5       28.6       20.4       24.4       42.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
*Light trucks from foreign-based manufacturers.                                                                                                         

    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 while the import 
manufacturers moved to larger vehicles, and more four-wheel drive light 
trucks, thus lowering their CAFE values.

Section III: 1997 Activities

A. Light Truck CAFE Standards

    On April 3, 1997, NHTSA published a final rule establishing a 
combined standard of 20.7 mpg for light trucks for MY 1999. The 
Department of Transportation and Related Agencies Appropriations Act 
for Fiscal Year 1997, Pub. L. 104-205, precludes the agency from 
setting the MY 1999 standard at a level other than the level for MY 
1998.

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 1997, NHTSA acted on three low volume petitions that were filed 
by Lotus, Rolls-Royce, and the Coalition of Small Volume Automobile 
Manufacturers, Inc. (COSVAM).
    Lotus submitted to the agency its low volume petition for MYs 1994, 
1995, 1997, and 1998. NHTSA issued a final decision to grant 
alternative standards of 24.2 mpg for MY 1994 and 23.3 mpg for MY 1995 
and denied requests for MYs 1997 and 1998 (62 FR 37153, July 11, 1997).
    In October 1996, Perusahaan Otomobil Nasional Berhad (Proton) 
acquired controlling interest in Lotus Cars Ltd. That acquisition 
rendered Lotus ineligible under 49 U.S.C. section 32902(d) for 
exemption for MYs 1997 and 1998 because Proton has an annual worldwide 
production of more than 10,000 vehicles.
    Rolls-Royce requested alternative standards for its passenger cars 
for MYs 1998 and 1999. NHTSA issued a final decision to grant an 
alternative standard of 16.3 mpg for MYs 1998 and 1999 (62 FR 17100, 
April 9, 1997).
    The Coalition of Small Volume Automobile Manufacturers, Inc. 
(COSVAM) submitted a petition to amend 49 Part 525.5 (limitation on 
eligibility for exemptions from average fuel economy standards). COSVAM 
requested that the agency not count the production of parent firms when 
low volume producers apply for low volume exemption. Members of COSVAM 
include Rolls-Royce, Ferrari, AM General, Aston Martin, Callaway, CSI 
Laboratories, de Tomaso, Lamborghini, Lotus, Maserati, McLaren, Morgan, 
and TWR Engineering. Several members of COSVAM are subsidiaries of 
larger vehicle manufacturers. For example, Ferrari and Aston Martin 
produce fewer than 10,000 passenger cars worldwide annually but are 
owned by Fiat S.p.A. and Ford Motor Company, respectively. Ferrari and 
Aston Martin are ineligible for CAFE exemption because of their 
ownership by Fiat and Ford. However, Rolls-Royce, an independent 
manufacturer, produces fewer than 10,000 passenger cars worldwide and 
is not owned by another automaker. It is eligible for exemption from 
the average fuel economy standards. The agency concluded that, for CAFE 
purposes ``vehicles manufactured by a manufacturer'' includes, all 
vehicles manufactured, worldwide, by any entity that controls, is 
controlled by, or is under common control with the manufacturer. The 
agency issued a denial of the petition to adopt COSVAM's definition 
that defined the number of ``Passenger automobiles manufactured by a 
manufacturer'' (62 FR 39207, July 22, 1997) because COSVAM's definition 
is contrary to the language and intent of the governing statute.
    In calendar year 1996, the agency acted on a joint petition filed 
by Lamborghini and Vector that was not included in the previous Annual 
Report to Congress. NHTSA issued a final decision to grant alternative 
standards of 12.8 mpg for MY 1995, 12.6 mpg for MY 1996, and 12.5 mpg 
for MY 1997 (61 FR 67491, December 23, 1996).

[[Page 16628]]

C. Enforcement

    49 U.S.C. 32912(b) imposes a civil penalty 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 
prior to or subsequent to the model years in question can be used to 
offset the penalty.
    On March 6, 1997, the civil penalty for manufacturers that violate 
a fuel economy standard increased from $5.00 to $5.50 pursuant to the 
inflation adjustment methodology included in the Debt Collection 
Improvement Act of 1996 (62 FR 5167, February 4, 1997).
    Table III-1 shows CAFE fines paid by manufacturers in calendar year 
1997. In calendar year 1997, manufacturers paid civil penalties 
totaling $806,465 for failing to comply with the fuel economy standards 
of 27.5 mpg for passenger cars in MYs 1994 and 1995. Final CAFE values 
were not available for manufacturers that may owe fines for MY 1996.

      Table III-1.--CAFE Fines Collected During Calendar Year 1997      
------------------------------------------------------------------------
                                                   Amount               
          Model Year             Manufacturer      Fined      Date Paid 
------------------------------------------------------------------------
1994.........................  Panoz..........       $3,850         8/97
1995.........................  Fiat...........      801,220        07/97
                               Panoz..........        1,395        08/97
------------------------------------------------------------------------

D. Carryback 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 fuel economy 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 1994 may be used 
to offset deficiencies in MYs 1995, 1996, and/or 1997. A manufacturer 
also may submit to the agency a carryback plan, which demonstrates that 
it will earn sufficient credits within the following three model years 
which can be allocated to offset penalties in the model year involved.
    General Motors submitted a carryback plan dated August 18, 1997 to 
the agency for MYs 1994 and 1995 light truck CAFE compliance. General 
Motor's carryback plan was approved.

E. Contract Activities

     Database Maintenance: Products and Production Capabilities 
of North American Automobile Manufacturing Plants
    During 1997, NHTSA continued to fund the maintenance of a database 
that details the products and production capacities of North American 
automobile manufacturing plants. The Volpe National Transportation 
Systems Center administers this program with annual funding of $60,000.
     Published Report: Fuel Economy Effects and Incremental 
Cost, Weight and Lead Time Impacts of Employing Variable Valve Timing 
(VVT) Engine Technology.
    In calendar year 1996, NHTSA initiated a study with a consultant to 
evaluate the fuel economy effects and cost and leadtime impacts of 
variable valve timing engine technology. The report and an in-house 
study of retail costs was published in Spring 1997.
    The agency awarded Dr. Donald Patterson a contract totaling $52,000 
to study the fuel economy effects, cost, and leadtime impacts of 
variable valve timing engine technology. In May 1997, the study was 
concluded and final results were published in a report titled, Fuel 
Economy Effects and Incremental Cost, Weight and Lead Time Impacts of 
Employing Variable Valve Timing (VVT) Engine Technology (DOT Report 
Number: HS 808 594). The in-house cost study was published with the 
same title as DOT Report Number HS 808 589.
    In recent years, new mechanical inventions and electronic engine 
controls have made variable valve timing (VVT) a production 
possibility. Variable valve timing can improve fuel economy by lowering 
idle speeds, allowing engine downsizing and improving cycle efficiency 
under part load operation (mainly by reducing pumping work).
    The report presents a paper study of the fuel economy benefits and 
the incremental manufacturing costs, tooling costs and engine weights 
as well as production leadtime for a VVT engine. Emission levels are 
considered. As a base, a 4-valve, V-6 engine of 3.5 liters was used 
with a 3,750 pounds passenger car. The VVT system applied to that 
engine was a combination of the Atsugi cam phasing system, a modified 
Mitsubishi MIVEC long and short duration cam system and intake port 
throttle. Fuel economy calculations were made as well for a typical 
light truck of 3,625 pounds with a 3.0 liter engine.
    The study suggests that the incorporation of VVT features into a 
modern V-6 engine will be costly to the vehicle buyer, at an estimated 
retail price increase of $392 (1997 dollars). Fuel economy gains will 
be significant over the life of the vehicle, estimated as up to 10.4 
percent for a passenger car and up to 8.8 percent for a light truck.
    The study presents these general findings of VVT:
     VVT allows idle speed reduction due to reduced valve 
overlap at idle.
     VVT produces higher mid-speed torque.
     VVT allows oxides of nitrogen (NOx) control by 
internal gas recirculation.
     VVT provides significant fuel economy gains but is 
accompanied by significant costs.
     Fuel economy gains with VVT were similar for the passenger 
car and light truck, the light truck benefits being lower.

[FR Doc. 98-8410 Filed 4-2-98; 8:45 am]
BILLING CODE 4910-59-P