Light-Duty Automotive Technology and
   Fuel Economy Trends:
   1975 through 2007


   Executive Summary
United States
Environmental Protection
Agency

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                Light-Duty Automotive Technology and
                            Fuel Economy Trends:
                              1975 through  2007

                              Executive Summary
                             Compliance and Innovative Strategies Division
                                           and
                                Transportation and Climate Division

                               Office of Transportation and Air Quality
                               U.S. Environmental Protection Agency
v>EPA
                  NOTICE

                  This technical report does not necessarily represent final EPA decisions or
                  positions. It is intended to present technical analysis of issues using data
                  that are currently available. The purpose in the release of such reports is to
                  facilitate the exchange of technical information and to inform the public of
                  technical developments.
United States                                        EPA420-S-07-001
Environmental Protection                                 _  ^  ,  .,
Agency                                           September 2007

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I.  Executive Summary

Introduction

       This report summarizes key trends in fuel economy and technology usage related to
model year (MY) 1975 through 2007 light-duty vehicles sold in the United States.  Light-duty
vehicles are those vehicles that EPA classifies as cars or light-duty trucks (sport utility vehicles,
vans, and pickup trucks with less than 8500 pounds gross vehicle weight ratings).

       Since 1975, overall new light-duty vehicle fuel economy has moved through four phases:

       1.     a rapid increase from 1975 through the early 1980s,
       2.     a slower increase until reaching its peak in 1987,
       3.     a gradual decline until 2004, and
       4.     an increase in 2005 and 2006, with 2007 levels projected to be similar to 2006.

       The projected average MY2007 light-duty vehicle fuel economy, based in large part on
pre-model year sales projections from automakers, is 20.2 miles per gallon (mpg).  The MY2006
value is also 20.2 mpg. There is greater confidence in the MY2006 value as the database for
2006 includes formal sales data for about 70% of the MY2006 fleet. The 20.2 mpg value for
model years 2006 and 2007 represents a 0.9 mpg, or 5%, increase over the 19.3 mpg value for
2004, which was the lowest fuel economy value since 1980.

       The fuel economy values in this report are either adjusted (ADJ) EPA "real-world"
estimates provided to consumers, or unadjusted EPA laboratory (LAB) values. Most of the data
is presented in adjusted values. Either adjusted or laboratory fuel economy may be reported as
city, highway, or, most commonly, as composite (combined city/highway, or COMP). In 2006,
EPA revised the methodology by which EPA estimates adjusted fuel economy to better reflect
changes in driving habits and other factors that affect fuel economy such as higher highway
speeds, more aggressive driving, and greater use of air conditioning. This is the first report in
this series to reflect this new real-world fuel economy methodology, and every adjusted fuel
economy value in this report for 1986 and later model years is lower than previously reported.
To reflect the fact that these changes did not occur overnight, these new downward adjustments
are phased in, gradually, beginning in 1986, and for 2005 and later model years the new adjusted
composite (combined city/highway) values are, on average, about 6% lower than under the
methodology used by EPA in previous reports in this series.  See Appendix A for more details.

       Because the underlying methodology for generating unadjusted laboratory fuel economy
values has not changed since this series began in the mid-1970s, they provide an excellent basis
for comparing long-term  fuel economy trends from the perspective of vehicle design, apart from
the factors that affect real-world fuel economy that are reflected in the adjusted fuel economy
values. For 2005 and later model years, unadjusted laboratory composite fuel  economy values
are, on average, about 25% greater than adjusted composite fuel  economy values.

       The Department of Transportation's National Highway Traffic Safety Administration
(NHTSA) has the overall responsibility for the Corporate Average Fuel Economy (CAFE)
program. For 2007, the CAFE standards are 27.5 mpg for cars and 22.2 mpg for light trucks.
EPA provides laboratory composite 55/45 fuel economy data, along with  alternative fuel vehicle
credits and test procedure adjustments, to NHTSA for CAFE enforcement. Accordingly, current
NHTSA CAFE values are a minimum of 25% higher than EPA adjusted fuel economy values.

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Importance of Fuel Economy

      Fuel economy continues to be a major area of public and policy interest for several
reasons, including:

       1.     Fuel economy is directly related to energy security because light-duty vehicles
             account for approximately 40 percent of all U.S. oil consumption, and much of
             this oil is imported.

      2.     Fuel economy is directly related to the cost of fueling a vehicle and is of great
             interest when crude oil and gasoline prices rise.

      3.     Fuel economy is directly related to emissions of greenhouse gases (i.e., carbon
             dioxide).  Light-duty vehicles contribute about 20 percent of all U.S. carbon
             dioxide emissions.
              Characteristics of Light Duty Vehicles for Four Model Years
                                             1975
1987
1997
2007
Adjusted Fuel Economy (mpg)

Weight  (Ibs.)
Horsepower
0 to  60  Time (sec.)

Percent  Truck Sales

Percent  Front-Wheel Drive
Percent  Four-Wheel Drive

Percent  Multi-Valve Engine
Percent  Variable Valve Timing
Percent  Cylinder Deactivation
Percent  Turbocharger

Percent  Manual Transmission
Percent  Continuously  Variable Trans

Percent  Hybrid
Percent  Diesel
13.1
4060
137
14.1
19%
5%
3%
_
-
-
-
23%
-
_
0.2%
22.0
3221
118
13.1
28%
58%
10%
_
-
-
-
29%
-
_
0.3%
20.1
3727
169
11.0
42%
56%
19%
40%
-
-
0.5%
14%
-
_
0.1%
20.2
4144
223
9.6
49%
51%
28%
70%
59%
8%
3%
8%
7%
2.2%
0.1%
                                         11

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Highlight #1: Fuel Economy Increases in 2005 and 2006 Reverse the Long-Term Trend of
Declining Fuel Economy From 1987 Through 2004.
   Overall fuel economy increased 0.9 mpg, or 5%, from 19.3 mpg in MY2004 to 20.2 mpg
   in MY2006. Fuel economy for both cars and trucks is projected to increase for MY2007.
   However, due to a slight increase in projected truck market share, the overall value for
   MY2007 is also projected to be 20.2 mpg.  The increases in 2005 and 2006 are the first
   consecutive annual increases in fuel economy since the mid-1980s.  This reverses a long
   trend of slowly declining fuel economy since the 1987 peak.
       Since 1975, the fuel economy of the combined car and light truck fleet has moved
through several phases: (1) a rapid increase from 1975 to the early 1980s, (2) a slow increase
extending to the fuel economy peak of 22.0 mpg in 1987, (3) a gradual decline from the peak to
19.3 mpg in 2004, and (4) consecutive annual increases in 2005 and 2006, growing to 20.2 mpg
in 2006, with the same value projected for 2007.

       The 20.2 mpg value for model years 2006 and 2007 is 1.8 mpg below the peak of 22.0
mpg in MY1987.  But, it is important to note that two-thirds of this difference is due to the new
methodology for calculating adjusted fuel economy values that is gradually phased in over the
1986 to 2005 timeframe. Based on the laboratory composite 55/45 fuel economy values, which
are not affected by the new methodology for calculating adjusted fuel economy values, the
MY2006 and MY2007 value of 25.3 mpg is 0.6 mpg below the peak of 25.9 mpg in 1987.

       MY2007 cars are projected to average 23.4 mpg and MY2007 light trucks are estimated
to average  17.7 mpg, both 0.1 mpg higher than MY2006. Most of the increase in overall fuel
economy since 2004 has been due to  higher truck fuel economy, as truck fuel economy has
increased by 1.0 mpg since 2004 while car fuel economy has increased by 0.3 mpg (prior to
MY2007, the overall fleetwide fuel economy increase had also been aided by a slightly higher
car market share). The recent increase in truck fuel economy is due, in part, to higher truck
CAFE standards, which have risen from 20.7 mpg in 2004 to 22.2 mpg in 2007.

                    Adjusted Fuel Economy by  Model Year
                                 (Annual Data)
                   Adjusted MPG
               10 I i  i i i Iiii i  I i i i i I i  iiiI i i i  i I i i i i Iiii i I i i  i i
                1970 1975  1980 1985 1990 1995 2000 2005 2010

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Highlight #2:  Trucks Continue To Represent About Half of New Vehicle Sales.
   Sales of light trucks, which include sport utility vehicles (SUVs), vans, and pickup trucks,
   have accounted for about 50 percent of the U.S. light-duty vehicle market since MY2002.
   After two decades of constant growth, light truck market share has been relatively stable
   for the last six years.
       Historically, growth in the light truck market was primarily driven by the explosive
increase in the market share of SUVs.  The SUV market share increased from less than 10
percent of the overall new light-duty vehicle market in MY1990 to about 30 percent of vehicles
built each year since 2003. By comparison, market shares for both vans and pickup trucks have
declined slightly since 1990.  The increased overall market share of light trucks, which in recent
years have averaged 5-7 mpg lower than cars, accounted for much of the decline in fuel economy
of the overall new light-duty vehicle fleet from MY1987 through MY2004.
                           Sales Fraction by Vehicle Type
                                    (Annual Data)
              100%
                   Market Share
                                                               IZI Car
                                                               msuv
                                                                  Van
                                                                  Pickup
                  1975   1980   1985   1990   1995   2000   2005
                                    Model Year
                                          IV

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Highlight #3:  Technological Innovation in 2005 and 2006 Was Utilized for Higher Fuel
Economy, Reversing the Long-Term Trend of Increasing Vehicle Attributes Such as
Weight and Performance.
   Automotive engineers are constantly developing more advanced and efficient vehicle
   technologies. From 1987 through 2004, on afleetwide basis, this technology innovation
   was utilized to support market-driven attributes other than fuel economy, such as vehicle
   weight (which supports vehicle content and features), performance, and utility.  This
   long-term trend was reversed in model years 2005 and 2006, as technology was used to
   increase fuel economy by 0.9 mpg. The current projection for MY2007 is an increase in
   market-driven attributes with no change in fuel economy, but this is subject to change
   when EPA obtains formal 2007 sales data.
       Vehicle weight and performance are two of the most important engineering parameters
that determine a vehicle's fuel economy.  All other factors being equal, higher vehicle weight
(which supports new options and features) and faster acceleration performance (e.g., lower 0-to-
60 mile-per-hour acceleration time), both  decrease a vehicle's fuel economy. Average vehicle
weight and performance had increased steadily from the mid-1980s through 2004.

       Average light-duty vehicle weight dropped in both model years 2005 and 2006, with a
slight increase in weight of cars more than offset by a larger decrease in truck weight and a
decrease in truck market share.  Average weight is projected to grow again in MY2007 to the
highest level ever. Average fleetwide performance was essentially unchanged in both 2005 and
2006, but is also projected to increase to record levels in MY2007.  The validity of these
projections will be confirmed when EPA obtains formal vehicle sales data after the end of
MY2007.
              4500
                             Weight and Performance
                                  (Annual Data)
                    Weight (Ibs.)                       0 to 60 Time (sec.)
              4000  --
              3500  --
              3000
                 1975
                         1980     1985    1990     1995

                                       Model Year
                                                        2000
                                                                2005
                                           V

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Highlight #4: Differences Between Marketing Group Fuel Economies are Narrowing.
   In 1987, when industry-wide fuel economy peaked, some major marketing groups had
   average fuel economies 6 to 8 mpg higher than other top marketing groups. For
   MY2007, the maximum difference between major marketing groups is estimated to be 4.6
   mpg, with a typical difference between higher and lower fuel economy marketing groups
   being 3 to 4 mpg.
       For MY2007, the eight highest-selling marketing groups (that account for over 95
percent of all sales) fall into three fuel economy groupings:  Honda, Toyota, and Hyundai-Kia
(HK) have estimated fuel economies of 22.7 to 22.9 mpg; Volkswagen and Nissan have
projected fuel economies of 20.6 to 21.4 mpg; and General Motors, Ford, and DaimlerChrysler
have estimated fuel economies of 18.3 to 19.4 mpg. Note that these adjusted fuel economy
values for marketing groups can not be directly compared to those in last year's report, since this
year's report uses the new methodology where adjusted fuel economy values since 2005 are, on
average, about 6% lower than in previous reports.

       Each of these marketing groups has lower average fuel economy today than in 1987.
Since then, the differences between marketing group fuel economies have narrowed
considerably, with some of the higher mpg marketing groups in 1987 showing larger fuel
economy decreases since 1987. Only one marketing group, Toyota, shows a slight increase in
average fuel economy since 1997.  For MY2007, Volkswagen is the only one of the eight
highest-selling marketing groups to have a truck market share of less than 40 percent.

           Marketing Group Fuel Economy for Three Model  Years
           Adjusted Composite MPG
        30
        25
        20
 2007
D1997
 1987
            Honda      Toyota      HK    VW    Nissan    GM     Ford      DC
                                         VI

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Important Notes With Respect to the Data Used in This Report

       Most of the fuel economy values in this report are a single adjusted composite (combined
city/highway) fuel economy value, based on the real-world estimates for city and highway fuel
economy provided to consumers on new vehicle labels, in the EPA/DOE Fuel Economy Guide,
and in EPA's Green  Vehicle Guide.

       It is important to note that EPA revised the methodology for estimating real-world fuel
economy values in December 2006.  This is the first report in this series to reflect this new real-
world fuel economy  methodology, and every adjusted (ADJ) fuel economy value in this report
for 1986 and later model years is lower than given in previous reports in this series.
Accordingly, adjusted fuel economy values for 1986 and later model years should not be
compared with the corresponding values from previous reports. These new downward
adjustments are phased in, linearly, beginning in 1986, and for 2005 and later model years the
new adjusted composite (combined city/highway) values are, on average, about 6% lower than
under the methodology previously used by EPA. See Appendix A for more in-depth  discussion
of this new methodology and how it affects both the adjusted fuel economy values  for individual
models and the historical fuel economy trends database.

       In some tables and figures in this report, a single laboratory composite (combined
city/highway) 55/45  value is also shown. Because the underlying methodology for generating
and reporting laboratory fuel economy values has not changed since this series began in the mid-
1970s, these laboratory fuel economy values provide an excellent basis for comparing long-term
fuel economy trends from the perspective of vehicle design, apart from the factors that affect
real-world fuel economy that are reflected in the adjusted fuel economy values. For 2005 and
later model years, laboratory composite fuel economy values are, on average, about 25% greater
than adjusted composite fuel economy values.

       Formal Corporate Average Fuel Economy (CAFE) compliance data as reported by the
Department of Transportation's National Highway Traffic Safety Administration (NHTSA) does
not correlate precisely with either the adjusted or laboratory fuel economy values in this report.
While EPA's laboratory composite 55/45 fuel economy data forms the cornerstone of the CAFE
compliance database, NHTSA must also include credits for alternative fuel vehicles and test
procedure adjustments (for cars only) in the official CAFE calculations.  Accordingly, NHTSA
CAFE values are at least 25% higher than EPA adjusted fuel economy values for model years
2005 through 2007.

       In general, car/truck classifications in this database parallel classifications made by
NHTSA for CAFE purposes and EPA for vehicle emissions standards. However, this report
relies on engineering judgment, and typically there are a few cases each model year where the
methodology used for classifying vehicles for this report results in differences in the
determination of whether a given vehicle is classified as a car or a light truck.  See  Appendix A
for a list of these exceptions.

       The data presented in this report were tabulated on a model year basis, but  many of the
figures in this report use three-year moving averages that effectively smooth the trends, and
these three-year moving averages are tabulated at the midpoint. For example, the midpoint for
model years 2005, 2006, and 2007 is MY2006.  Figures are based on annual data unless
otherwise noted.
                                         VII

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       All average fuel economy values were calculated using harmonic, rather than
arithmetical, averaging, in order to maintain mathematical integrity. See Appendix A.

       The EPA fuel economy database used to generate the fuel economy trends database in
this report was frozen in February 2007, yielding additional data beyond that used in last year's
report for model years 2004 through 2007, although additional data for MY2006 was added in
April 2007.

       Through MY2005, the fuel economy, vehicle characteristics, and sales data used for this
report were from the formal end-of-year submissions from automakers obtained from EPA's fuel
economy database that is used for CAFE compliance purposes.  Accordingly, values for all
model years up to 2005 can be considered final.

       For MY2006, the data used in this report is based on a database where  about 70% of the
total sales are from formal end-of-year CAFE submissions by automakers, and about 30% are
from confidential pre-model year sales projections submitted to the Agency by the automakers,
with these latter projections updated based on actual 2006 sales data reported in trade
publications.  EPA has a high level of confidence in the data for MY2006, given that 70% of the
2006 data is based on actual CAFE reports.  It is noteworthy that the 25.3 mpg laboratory fuel
economy value for MY2006 in this report is 0.7 mpg higher than the projected 24.6 mpg
laboratory fuel economy value for MY2006 in the 2006 report.  This suggests  that sustained,
higher gasoline prices have led to actual 2006 sales that differ from the projected 2006 sales
provided to EPA by automakers in 2005.

       For MY2007, EPA has exclusively used confidential pre-model year sales projections,
updated based on actual sales for the first 7 months of model year 2007 (October 2006 through
April 2007). MY2007 projections are more uncertain, particularly  given the changes in the
automotive marketplace driven by higher fuel prices and other factors. For model years 1998
through 2005, the final laboratory  fuel economy values for a given  model year have varied from
0.4 mpg lower to 0.3 mpg higher compared to original estimates for the same model year that
were based exclusively on projected sales.
                                        VI11

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For More Information

Light-Duty Automotive Technology and Fuel Economy Trends: 1975 through 2001
(EPA420-R-07-008) is available on the Office of Transportation and Air Quality's (OTAQ) Web
site at:

http ://www. epa. gov/otaq/fetrends.htm
Printed copies are available from the OTAQ library at:

      U.S. Environmental Protection Agency
      Office of Transportation and Air Quality Library
      2000 Traverwood Drive
      Ann Arbor, MI 48105
      (734)214-4311
A copy of the Fuel Economy Guide giving city and highway fuel economy data for individual
models is available at:

http ://www.fueleconomy. gov

or by calling the U.S. Department of Energy at (800) 423-1363.
EPA's Green Vehicle Guide providing information about the air pollution emissions and fuel
economy performance of individual models is available on EPA's web site at:

http ://www. epa. gov/greenvehicles/
For information about the Department of Transportation (DOT) Corporate Average Fuel
Economy (CAFE) program, including a program overview, related rulemaking activities,
research, and summaries of individual manufacturer's fuel economy performance since 1978,
see:

http://www.nhtsa.dot.gov/ and click on "Fuel Economy"
                                          IX

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