Proposing effective strategies for meeting an environmental regulation with attainable technology improvement targets

The Japanese government will adopt the CAFE standard after 2020. By using a "modified" slacks-based measure (SBM) model, this study analyzed the technical efficiency of 113 gasoline vehicle models (GVs) and 54 hybrid vehicle models (HVs) sold by Japanese manufacturers in 2016. We also estimated attainable fuel efficiency of specific vehicle models that can be further improved referring to the nearest point on the best practice frontier. The improved CAFE values and standards of the nine automobile manufacturers were calculated. The technology gap from the vehicle technology frontier was more noticeable among gasoline vehicles than among hybrids. Moreover, most automobile manufacturers can achieve the CAFE standard through an effective achievement strategy based on best practice technologies, whereas the others will not achieve the CAFE standard even given a rapid technology innovation beyond the best practice frontiers for GVs and HVs.