U.S. auto fleet hit record high fuel efficiency in 2017

WASHINGTON (Reuters) - The U.S. Environmental Protection Agency said on Wednesday that the average fuel efficiency of cars and trucks hit a record high in the 2017 model year, but highlighted in a report “legitimate concerns” about the industry’s ability to meet rising annual requirements.

FILE PHOTO: Automobiles are shown for sale at a car dealership in Carlsbad, California, U.S. May 2, 2016. REUTERS/Mike Blake

For the 13 major automakers that sell vehicles in the United States, the average increase in fuel efficiency was a modest 0.2 miles per gallon (mpg) to 24.9 mpg from 24.7 mpg in 2016, in part because Americans were buying more large SUVs and pickups and fewer cars.

EPA Administrator Andrew Wheeler said “there are legitimate concerns about the ability to cost-effectively achieve the Obama Administration’s standards in the near future” and he noted that just three out of 13 major automakers met the 2017 requirements without using credits.

Automakers earn credits for over-complying with fuel efficiency requirements and can save them for use in future years when they face tougher standards or sell them to competitors if they do not need them. Automakers worry that without significant changes, they will not be able to meet requirements after 2020 because many credits expire.

The EPA report also shows that preliminary fuel efficiency for 2018 jumped by 0.5 mpg to 25.4 mpg.

Luke Tonachel, director for clean vehicles and fuels at the Natural Resources Defense Council, said the “data shows the current standards are working” and suggests that automakers could adopt additional existing technologies to improve fuel efficiency.

The Alliance of Automobile Manufacturers, a trade group representing major U.S. and foreign automakers, said they have invested billions of dollars to offer highly fuel efficient models but acknowledged that with low gas prices they are not selling as many as some forecast.

“Market conditions are a critical reality since our compliance with federal standards is based on sales and affordability,” it said.

The report shows that Fiat Chrysler Automobiles NV bought a significant number of credits, while Honda Motor Co, Nissan Motor Co, Toyota Motor Corp and Tesla Inc sold credits. BMW AG, Jaguar Land Rover, Volkswagen AG, and Daimler AG also bought credits, the report said.

Honda had the highest average fuel economy at 29.4 mpg, followed by Mazda Motor Co at 29 mpg and Hyundai Motor Co at 28.6 mpg.

The U.S. automakers, which sell more trucks than their foreign competitors, were at the bottom of the list. Ford Motor Co and General Motors Co were at 22.9 mpg, ahead of only Fiat Chrysler at 21.2 mpg.

Toyota, which ranks ninth out of the 13 automakers, was the only major automaker to see its fleet-wide average fall as it sold more SUVs and trucks and fewer cars.

Fiat Chrysler disclosed last month it paid $77 million in U.S. civil penalties for failing to meet 2016 model year fuel economy requirements.

In August 2018, the EPA and National Highway Traffic Safety Administration unveiled a proposal to freeze fuel economy requirements at 2020 levels through 2026, a move it said would save automakers more than $300 billion in regulatory costs and reduce traffic deaths.

The Obama administration had adopted rules calling for a nearly 5 percent annual increase in fuel efficiency requirements from 2021 through 2026.

Reporting by David Shepardson; editing by Susan Thomas and Phil Berlowitz