Let’s face it, establishing your selector list up to now hasn’t been all that difficult. Even with the price of fuel escalating, as well as sticker prices, you have been able to have a choice of select vehicles that “fit the job.” Once you figured out your lifecycle costs and reviewed your factory (OEM) incentives, you had it made.
We spent the last decade fully aware of E-85, flex-fuel, hybrids, propane autogas, compressed natural gas (CNG), and six- vs. four-cylinder engines, but pretty much stuck with a mid-size-intermediate sedan for a car pick.
In fact, fleets bought fewer of the combined “compact-subcompact” U.S. market in 2011 than in the pre-recession year of 2007.
Now, most fleets are trying many of the alternatives because the 2016 CAFE rule calls for a 35.5 mpg average for the OEMs. That’s just three model-years away and some OEMs may not make that average in time.
With gasoline prices not likely to go any lower (more likely to go higher), few retail customers want to get greener or go smaller in body style (not dissimilar to fleet drivers), so choices are a real dilemma for the fleet manager. And, especially for the OEMs, who are struggling even to meet the 2016 standard.
At this point, it’s important to note that the OEMs have offered many options, but it’s still not enough — for them or for fleets. Yes, hybrids help, but may not be enough to meet the levels needed.
Even four-cylinders alone won’t do it, even if you have twin turbos attached. They’re up to eight- and nine-gear transmissions, but now the added weight negates going higher. The battery weight in the electrics faces the same challenge plus the limited range. Fuel-cell technology remains (as it has for years) to be a decade or two away. Ford has even talked about switching to virtually all aluminum for its popular F-150 pickup to save 700 lbs. But, is it enough?
We’re at a critical crossroads of engineering vs. regulation.
My mind was totally absorbed at a recent OEM Fleet Advisory Board meeting. I was listening to some of the most astute fleet minds in the business. They were looking for definitive answers now so they can present a reliable future picture to their executive management (and probably CYA). Their concern was real and beyond a “think-tank” level. They were demanding knowledge of the best predictions for the post-2016 era, knowing that the legislated new CAFE standard for 2025 is an incredible 54.5 mpg corporate average (with 5-percent improvements for cars each year up to 2025, but is this the end?).
This august group was questioning how they were going to continue to “get the right vehicle for the right job” when push comes to shove on mpg. When the “job” calls for large SUVs, big vans, and/or heavy pickups, will the factories be building them if they have a CAFE problem? Will they be premium priced (like sky high) to discourage buyers? Will retail buyers embrace the electrics and tiny subcompacts in numbers to permit continued building of the “big” models? In the vein of unintended consequences, what impact will the “light-weighting” initiatives for future models have on accident management costs and safety?
These pro fleet managers want to be able to alert senior management of the possible obstacles, both in availability of vehicles, the physical limitations on specs, and the pricing so alternatives can be carefully studied now. This is serious business to both buyers and sellers. Factories don’t want to build cars no one wants, but, under current law (CAFE rules), reliable answers are hard to come by.
Do I have your attention? It’s not Armageddon, but it could be close. Only some really high-tech miracles or White House or Congressional reprieve can prevent a total change in life for you and me — at least as we know it.
A question you might ask yourself is whether an election year could make a difference. Let me know how you feel. [email protected]