Daimler-Chrysler’s big-truck building cousin Freightliner reports that manufacturers of medium and heavy diesel trucks (and consequently their component suppliers), are facing a dramatic reduction in sales presently. Truck buyers in all markets are showing hesitation to purchase trucks equipped with the new engine technology necessary to meet the diesel exhaust emissions standards that go into effect in the United States and Canada on January 1, 2007.

Depending on specification and weight class, Freightliner vehicles, are subjected to price increases ranging from $4,600 to $12,500, before taxes, for the new engines. As a result Freightliner recently announced plans to cut production at its truck manufacturing plant in Ontario, Canada. Initially about 800 employees will be idled as a result. According to Freightliner this is the first in a series of such cuts that will affect all the company's assembly plants during the first quarter of 2007. As many as 4,000 production and related workers may be affected, and this is just at Freightliner.

While we all benefit from cleaner air that will ultimately result, the costs associated with this new technology may severely affect the trucking industry's employees, suppliers, shareholders, dealers and ultimately the consumer. These engine and emission-control changes go hand-in-hand with the new ultra low sulfur diesel (ULSD) fuel. Where I live in California, ULSD is now about 80 to 90 cents per gallon more than regular gasoline! This wipes out much of the benefit of higher fuel mileage that diesels enjoy and may combine with the higher cost of the new technology in light-duty diesel trucks such as our beloved Cummins-powered Dodges.

Hopefully demand for heavy trucks will start to recover soon, as customers gain confidence in the new emissions technology, and existing vehicles require replacement. Let’s hope that this buyer backlash doesn’t spread to pickups and that the oil companies back off on the price of ULSD.