Top Japanese automakers will benefit from tougher federal standards in US

Article by Christian A., on April 11, 2013

Top Japanese automakers Toyota, Honda and Nissan will have no problem in meeting tougher federal standards in the United States as they already have a huge start from credits they’ve gotten since the 2009 model year. Since these automakers have already surpassed the old fuel economy standards before new requirements were implemented, Toyota, Honda and Nissan have a big enough cushion that will help them meet increasingly stringent standards.

David Friedman, a senior engineer at the Union of Concerned Scientists, said that in March, the EPA released a report that details that these automakers have so many credits that their existing fleets, unrevised, may meet EPA requirements through the 2016 model year.

Friedman said that the companies aren’t likely to do that as they have to meet much tougher standards from 2017 to 2025 and since fuel economy has turned into a vital selling point. He said that these companies have sufficient credits so they may put off the near-term investments in clean cars. When the new standards began to phase in for the 2012 model year, Toyota had 86 million EPA credits.

Every credit stands for one more metric ton of carbon dioxide that its vehicles could emit over their lifetimes than the Obama administration's new program nominally permits. These credits give Toyota additional options for complying with new EPA limits on tailpipe emissions, which will become 3 percent to 5 percent more stringent every year in tandem with new corporate average fuel economy standards that increase by up to a nominal 54.5 mpg in the 2025 model year.

Toyota, the major player in hybrids, and other automakers have been silent about what it intends for these credits, which can be used until the 2021 model year, with the exception of the credits from 2009, which last just five years. Tom Stricker, vice president of technical and regulatory affairs at Toyota Motor North America, admitted that the credits are a "valuable tool for future compliance."

Sergio Marchionne, chief executive officer of Chrysler, remarked last year that 54.5 mpg rule of the Obama administration would make a significant difference in the future of the auto industry. For instance, muscle cars such as the Hemi-powered DodgeChallenger would be “as rare as white flies.” While V8 engines are still in existence, rising prices of gas and new vehicles would make owning a V8-equipped car a very expensive move.

In the recent year, engine size has been losing importance as carmakers become increasingly reliant on technologies such forced induction and direct injection to squeeze more power from a smaller mill. In fact, some carmakers are also installing hybrid drivetrains into their performance cars.

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