Much will happen in the auto industry over the next four years, including the reclassification of vehicles for the US market, based on new, less-stringent corporate average fuel economy standards announced this week. Starting in model year 2030, the US Department of Transportation wants vehicle classifications to reflect reality, eliminating a decades-old loophole that allowed many popular vehicles – ranging from the massive Chevrolet Suburban to the old Chrysler PT Cruiser to be labeled as light trucks.
What sounds like a bizarre, wonky policy crafted for corner cutting to evade environmentally focused fuel-efficiency mandates since the 1970s has actually altered the US market in unforeseen ways, while doing little to improve air quality or vehicle affordability.
2024 – 2026 Chevrolet Trax 2nd Gen SUVChevrolet
So Many ‘Light Trucks’ Without Beds
For instance, sedans have been disappearing from the US market, and some automakers say it’s because consumers want bigger vehicles instead. But in truth, federally regulated CAFE standards are much more stringent for unibody sedans, coupes, roadsters, hatchbacks, and wagons – the so-called passenger cars – while literally every other vehicle type – from Chrysler minivans and Chevy Equinox crossovers to full-size body-on-frame Ford Expeditions and F-150 pickups – is considered a light truck for federal purposes in regulating fuel economy and emissions.
Of course, certain automakers lobbied for that change long ago and continue doing so today because profit margins are commensurate with vehicle size. All this explains why the average price of a new car in America hovers around $50,000 and why Ram and Jeep are Stellantis’ two most robust brands in the US.
The Department of Transportation says the new rules will accurately reflect a vehicle’s purpose. It’s not clear whether it’s actually stated in the standards, but perhaps a “truck” will need a bed, or at least more room for cargo than people.
2026 Kia K4 HatchbackKia
More Hatchbacks, Wagons Coming?
If these rules actually roll out in 2030, the department says automakers will no longer be “disincentivized from making hatchbacks, wagons, and smaller footprint vehicles in general.” But analyst Sam Abuelsamid is skeptical that more hatchbacks and small cars are on the way.
“I don’t expect any changes in the short term, but three to five years out we could see some shifting back to cars — although it might be limited,” says Abuelsamid, vice president of Telemetry Insights.
“Automakers like pushing the crossovers because they get higher margins on them, and margins are always a challenge on small cars.”
–Sam Abuelsamid, VP of Telemetry Insights
2027 Honda Passport TrailSport from the front three-quarter angleHonda
While the new rule is intended to eliminate incentives for automakers to add equipment for a crossover SUV to be considered a light truck, for instance, Abuelsamid says most of these vehicles don’t actually have that much more equipment than a comparable car, beyond a higher seating position. “Basically, if an OEM says it’s a light truck, it’s a light truck,” even without additional equipment, he says. The current Buick Envista and the old Chevy HHR were all considered light trucks.
Focus On Off-Road Capability Will Remain
On the other hand, dedicated off-road variants such as Honda Trailsport, Toyota Woodland, and Hyundai XRT models actually do get more rugged equipment, he says. “Given the popularity of these variants, I don’t see automakers backing away from them,” Abuelsamid says.
2027 Ram 1500 by RoushRoush Performance
While the new rules seemingly open the door to more full-size SUVs and pickup trucks without fear of federal penalties or fines, Abuelsamid doubts that will happen, partly because they are expensive and consume lots of fuel while gasoline prices spike. For the record, Abuelsamid says profit margins on big trucks and SUVs are typically between $15,000 and $20,000 – and even higher for variants like Raptor and TRX.
“I don’t actually expect large truck/utility sales to climb significantly because the market is getting saturated, and market share has stayed flat in the 18-20 percent range since the early 1980s.”
2027 Nissan Rogue Hybrid from the front three-quarter angleNissan
Efficiency Necessary For Affordability
Despite these relaxed fuel-economy regulations fitting neatly into President Trump’s push for deregulation on many fronts, Abuelsamid expects automakers will continue developing more efficient vehicles to remain competitive and improve affordability. “The only way to improve affordability is make the vehicles cheaper to operate,” he says. “They also have to be ready to compete against the Chinese at some point, so nothing is really going to change.”
Hybrids, battery-electric vehicles, and extended-range EVs will remain in automaker product plans because “it helps reduce the total cost of ownership, which helps affordability in the absence of lower prices,” Abuelsamid says, noting the cost premium for hybrids has shrunk dramatically. Again, these alternative powertrains will be necessary to compete with China, he says.
2026 Toyota Prius Nightshade front 3/4Toyota
CarBuzz Insight – Why This Matters:
By 2030, the Transportation Department expects the new CAFE regulations will cut the average cost of a new vehicle in the US by $1,300, and that the current fleet mix of 70% light trucks and 30% passenger vehicles will flip the other way, to around 70% passenger vehicles.
Closing loopholes is a good idea, and it makes sense to reclassify vehicles based on how they are actually used or even constructed, for instance, body-on-frame versus unibody. A key question remains about compliance and enforcement, as the Trump administration has said it won’t issue any fines. But after 2029, a future administration could decide to retroactively fine companies for non-compliance.
Source: US Department of Transportation
