Daimler Chief: Hike Fuel Tax, Repeal Excise Levy

This story appears in the Oct. 28 print edition of Transport Topics.

ORLANDO, Fla. — The new head of Daimler Trucks waded right into the U.S. political scene during his inaugural U.S. press conference last week, urging Washington officials to find a way to work together in order to bolster the nation’s economy, and the world’s.

Wolfgang Bernhard also recommended a closer working relationship between European and U.S. legislators and regulators to counter growing competition in their home markets from Asia, urged the repeal of the 12% U.S. federal excise tax on new heavy-duty trucks and an increase in U.S. fuel taxes.

Bernhard, who took over as head of the world’s largest commercial vehicles maker April 1, said that the “continuous state of uncertainty” that has gripped Washington for months over the nation’s budget and debt ceiling is “not only hurting the U.S., it’s hurting the world.”

Bernhard said Congress should repeal the federal excise tax in order to encourage truck fleets to replace older, less-efficient and dirtier-running vehicles. He said boosting federal fuel taxes would help replace the revenue lost by ending the sales tax and further encourage companies that run older trucks to replace them with more efficient ones.

He said U.S. environmental regulators already are looking “for the next big thing” to impose on truck makers and urged the government instead to get behind the campaign to replace older vehicles, which he said would produce better environmental results faster and more cheaply.

Bernhard said 60% of the U.S. fleet is composed of trucks that were made before 2004 and that the largest segment of that group is trucks that were built before 1998. The average age of the entire fleet is 11 years, he added.

Replacing the oldest trucks with new ones would cut particulate emissions by more than 90%, he said, and NOx emissions by 60%.

The trucks would lower emissions, improve fuel economy and produce many new domestic jobs, he said.

He noted the global business market “would welcome” progress on the U.S. political front toward a bipartisan solution.

“It’s in all our interests that Washington find a way to provide a stable economic climate,” Bernhard said.

He said his company also was supporting the end of the excise tax and the boost in the fuel tax in part because both are goals of the nation’s trucking companies, as championed by American Trucking Associations.

Meanwhile, he said, the ongoing bilateral talks over the Transatlantic Trade and Investment Partnership that are designed to remove trade barriers between the United States and European Union represented a perfect opportunity for both.

“We have to close ranks” to counter growing Asian competition, he said, quoting Ben Franklin’s comments on signing the Declaration of Independence: “We must all hang together, or assuredly we shall all hang separately.”

He said the TTIP talks could yield great savings for manufacturers, and eventually to their customers, by standardizing U.S. safety and environmental regulations.

Bernhard said the “minor differences” between those standards add in great cost to truck manufacturers, with little gain in safety or emissions controls.

Bernhard’s remarks are a departure for Daimler. His predecessor at the Germany-based company, Andreas Renschler, steered clear of discussing U.S. politics.

Daimler has large holdings in the United States, and Bernhard reminded reporters that it has invested $750 million in recent years in upgrading its Detroit engine plant in Redford, Mich., and recently announced a major expansion to its truck assembly plant and headquarters in Portland, Ore.

He also urged U.S. regulators to adopt a “full vehicle standard,” as they proceed on ways to curb greenhouse-gas emissions.

“We don’t think it’s helpful” to separate the engine from the entire truck when looking at GHG emissions.

Up to now, many of the gains in GHG have come as a result of improved aerodynamic designs of tractors and trailers, along with increases in fuel economy through engine enhancements.

After Bernhard spoke, Martin Daum, who runs Daimler’s truck operations in North America, lowered his prediction for total heavy-duty sales in the United States this year, saying they likely would end up 4% below 2012’s total, and 5% below in the entire North American region.

Daum said he forecast that 2014 would end up somewhere between “flat and plus 10%.”

This year, he said, Class 8 sales in the United States were down 10% to 11% for Daimler, while Classes 6-7 sales were up 11% through September.

Bernhard told reporters that Daimler has received 20,000 orders for the Freightliner Cascadia Evolution, its new model that the company says is the most fuel-efficient heavy-duty truck in North America.

Daum said that coming models of the Evolution would get even higher mileage, and he predicted that sales of automated manual transmissions “will explode next year.”

Truck makers have only recently begun pushing AMTs in North America.