Environmental research group ERM just released a study of the North American truck market claiming that there is “no evidence” of heavy diesel truck buys ahead of Environmental Protection Agency emissions regulations in 2004, 2007, 2010, and 2014.

Nonsense, says ACT Research’s Kenny Vieth (and likely anyone else who’s been in the industry for 20 years or more.)

The study was commissioned by the National Resource Defense Council, the Sierra Club, and the Union of Concerned Scientists. NRDC’s Patricio Portillo and Hieu Lee from Sierra Club responded to the report in a joint blog, concluding that “there is no firm basis to claim that truck emissions standards impact sales or employment.” Dave Cooke at the Union of Concerned Scientists called the truck manufacturing industry’s arguments against strong emissions standards “a bunch of hot air.”

Why Does ERM Think Truck Prebuys are 'Hot Air'?

Which begs the question: Why are these groups suggesting that truck prebuys have never occurred? Well, the answer, according to ERM, is that “nefarious” truck makers are seeking to “try and block important standards to curb pollution from trucks.”

And one of the ways nefarious truck builders do this, according to ERM, is by urging truck buyers to “purchase new trucks before new regulations kick in and then buy fewer new vehicles when the new regulations kick in.”

On the surface, this doesn’t make a whole lot of sense. But presumably, the reasoning is that — for some reason (a “nefarious one, I guess) — the truck builders want to sell more polluting trucks and fewer clean ones.

(Every truck OEM executive I’ve ever talked to just wants to sell trucks, period. As many as they can. Every single year. Year in. And year out. But OK. Whatever.)

ERM goes on to say in its press release, “We expect EPA to release their final rule to curb NOx emissions from heavy-duty vehicles in the coming weeks, and we hope this additional information gives you context to counter the truck makers’ spin. In short, strong standards to curb emissions from heavy-duty trucks and buses provide vast public health and environmental benefits that will help clean up our air and make our environment safer and healthier for everyone.”

Understanding the Importance of TCO and the Economy in Truck Buying Decisions

I decided to reach out to Kenny Vieth, president and senior analyst at ACT Research, to see what he thought about it.

I interviewed Kenny back in September, when he gave me some insights as to why ACT Research analysts think there is going to be a “massive” diesel truck prebuy in 2025 and 2026, ahead of the EPA’s 2027 diesel exhaust emissions regulations. Kenny and his people know their stuff, and that story is certainly worth a read for some additional perspective regarding this ERM study.

For openers, I asked Vieth if this ERM report was just a bunch of nonsense.

“Well,” he replied, “I guess that’s the polite term to use for it.”

He then walked me through why pretty much everything ERM is contending in its report is just flat-out wrong.

For starters, he pointed out, numbers don’t lie. Sales figures for several pre-mandate years, such as 2004 and 2007, clearly show a spike in Class 8 sales ahead of new emissions mandates becoming effective.

Secondly, Vieth said, it’s pretty obvious that ERM analysts don’t understand fleet operating costs or total cost of ownership numbers for vehicle assets.

He used the 2014 emissions mandates as an example.

“There was no truck prebuy ahead of those emissions regulations,” he pointed out. “That’s because if you look at fuel economy performance figures for trucks purchased between 2009 and 2015, they got about 6.2 mpg. But, for 2014 model trucks, fuel economy rose to about 7.5 mpg. So, if you’re a fleet running around 100,000 miles a year per truck, you’d burn around 16,100 gallons of fuel in a pre-2014 truck, but only 13,200 gallons per year in a 2014 model year truck. If you’re saving 2,900 gallons of fuel, you’re going to be crushing it on TCO, even if the price of the new truck goes up about $6,000 per unit. So you’re not going to prebuy trucks. It’s a no-brainer. In fact, you’re probably going to hold off buying trucks as the year progresses and wait to buy the newer [more fuel-efficient] models when they become available.”

It's Not Easy Being Green

Vieth said the ERM report isn’t surprising, since most environmental groups seem to have a baseline belief that truckers and fleets simply love pumping massive volumes of black smoke into the atmosphere for the sheer thrill of it.

“Most fleets I talk to would love to have trucks that burn green hydrogen as a fuel, if they could,” he said. “But that’s not an option today. And their role in this economy — and their businesses — depend on moving freight. And there’s more to making that happen than just upfront costs. There are downstream costs that are just as important. Things like maintenance concerns, cost of operation, and the cost of making new technologies work efficiently. ERM doesn’t seem to understand that.”

Finally, Vieth pointed out, whether fleets want to prebuy trucks or not depends largely on whether they have the ability, and willingness, to do based on economic conditions at the time.

“For example, when the 2010 regulations were about to become law, fleets knew the new trucks were going to be more expensive. So, they had a willingness to prebuy trucks,” he explained. “However, the country was in a deep recession at the time. No one could get credit and there was no freight capacity. So, they couldn’t borrow money. And they weren’t making money. So, a prebuy was out of the question.”

To prebuy, or not to prebuy, comes down to doing what is best for the fleet in that moment in time based economic circumstances.

“We’re in a downturn right now,” Vieth said. “But at ACT Research, our thought is that we’ll be coming out of it by 2024, just ahead of the next round of EPA emissions regulations. We also think fleets will be in a sweet spot in terms of freight, just as they were in 2006. Fleets will likely be profitable and have the ability to prebuy trucks and stave off considerable price increases for 2027-model trucks — which we predict could rise as much as $20,000 to $25,000 per unit. That is a significant increase in upfront costs for their business. So, the willingness to prebuy trucks will obviously be there. And if economic conditions give them the ability to do so, it will be an obvious, no-brainer, business decision for them.”