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Mexico's truck makers delay investment amid doubts on new clean diesel rules

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By Sharay Angulo

MEXICOCITY (Reuters) – Mexico’s truck manufacturers have not started making the investments they need to assemble and import vehicles that use clean diesel ahead of new rules that will restrict the use of high-sulfur diesel, an industry association said on Tuesday.

Mexico’s government has ordered gas stations, which are mostly operated by state-run Pemex, to distribute and sell the replacement ultra-low sulphur diesel (ULSD) from July, while truck manufacturers will from January 2021 only be allowed to import, make and sell ULSD-run trucks.

But distribution of ULSD to gas stations has been slow as Pemex continues producing high-sulphur diesel and independent importers and sellers have not significantly increased ULSD purchases, according to figures from Mexico’s association of bus and truck makers, known as Anpact.

A survey conducted by the association among a sample of some 350 gas stations revealed ULSD present at 79 percent of them, versus 81 percent in 2018. Mexico has over 12,000 stations.

“There are regions where the fuel is nowhere to be found,” Anpact president Miguel Elizalde said on Tuesday at a news conference.

In a preliminary version of its business plan, Pemex in July said it was not in compliance with the ULSD rule, so it was introducing “legal measures” while trying to increase domestic production of the fuel. That was not included in the public version of the plan.

Pemex did not immediately reply to a request for comment. Mexico’s energy regulator could not be reached for comment. The association is requesting a meeting with Pemex to discuss the issue, Elizalde said.

Amid uncertainty over the availability of ULSD, truck makers have not yet prepared for the rule ordering them to switch fuel consumption of heavy vehicles produced and imported into Mexico to ULSD by 2021 under the Euro VI-EPA 10 international standards, so they are asking for more time.

“Nobody is forced to comply with the impossible. If there is not 100% coverage of ULSD, they cannot force us to abandon the (current) Euro V-EPA 7 ahead of time,” he said.

Truck and bus makers including Navistar International <NAV.N>, Kenworth <PCAR.O>, Mercedes-Benz <DAIGn.DE>, Freightliner, Volkswagen <VOWG_p.DE>, and Volvo <VOLVb.ST> would need 18-24 months to prepare factories, distribution chains, stores and sales forces for the change, Anpact said, pointing out there was 16 months to go until the changeover date.

“We are running out of time,” Elizalde added.

Postponing the ULSD norms – including those for truck makers – or giving Pemex and heavy vehicle makers options to adapt could be temporary solutions, the executive said.

(Reporting by Sharay Angulo; Additional reporting by Marianna Párraga and Lizbeth Díaz; Editing by Rosalba O’Brien)

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