The Environmental Protection Agency says technological advances by auto makers have helped improve light-vehicle fuel efficiency, reversing a downward trend that began 20 years ago.

But the EPA report also suggests additional gains won’t come easily.

After full-year sales are tabulated, a new EPA study projects average fuel economy for ’07 cars and light trucks will be 20.2 mpg (11.6 L/100 km), or flat with 2006. That’s still 4.7% better than the 19.3 mpg (12.9 L/100 km) in 2004, which was the worst fuel economy rating since 1980.

The news also means fuel efficiency improved in both 2005 and 2006, which marks the first consecutive annual increases since the mid-1980s and reverses a steady decline that began after fuel economy reached its peak in 1987.

“This report is great for both our wallets and our environment,” says EPA Administrator Stephen L. Jackson, in a statement. “Auto makers are answering President Bush’s call to improve fuel economy and decrease our nation’s dependence on foreign oil.”

Ironically, the efficiency gains were accomplished despite substantial increases over the last 20 years in overall vehicle weight and horsepower, a greater mix of trucks versus passenger cars, fewer front-wheel-drive vehicles and more automatic transmissions.

Of particular note, the improvements come courtesy of one of the industry most maligned segments – trucks and SUVs. According to the EPA, overall truck fuel economy in 2007 will reach 17.7 mpg (13.2 L/100 km), an increase of 6% from 2004.

Meanwhile, average passenger-car fuel economy will hit 23.4 mpg (10.0 L/100 km) this year, or 1.3% better than 2004.

The agency points to a combination of technological advances by auto makers mostly on the truck side, in addition to slightly lower light-truck market share and stricter government standards for the segment.

Reducing truck weight ranks as the greatest technological advancement, the EPA says. Average light-duty vehicle weight dropped in 2005 and 2006, as auto makers broke from a long-term trend of using technology to meet consumer demands for additional content and features to using it to meet stricter corporate average fuel economy standards in the segment.

CAFE standards for trucks increased to 22.2 mpg (10.6 L/100 km) in 2007 from 20.7 mpg (11.3 L/100 km) in 2004.

The EPA report uses a new testing method that it says more closely reflects real-world driving conditions, but which leads to a discrepancy between its fuel efficiency averages and those of the National Highway Traffic Safety Admin., which enforces CAFE rules.

The EPA’s vehicle segmentation also differs from the industry’s. For example, the fullsize Ford F-150 and compact Nissan Frontier are considered the same.

Environmental groups that favor stricter CAFE standards, namely a proposal approved by the Senate that calls for cars and trucks to reach a combined average of 35 mpg (6.7 L/100 km) by 2020, stop short of calling the EPA findings a victory for the law.

“It shows CAFE works but to a limited degree,” Lowell Ungar, policy director at the Alliance to Save Energy, tells Ward’s. “These are baby steps and we need moonwalks.”

More disconcerting, Ungar says, are findings in the report that point to heavier vehicles in 2007. The EPA thinks average weight will grow again this year to its highest level ever, which means fuel economy improvements must again fight against the tide, Ungar says.

“The trend to ever-bigger, gas-guzzling vehicles has been reversed,” he says. “People are moving to more and more efficient vehicles. Unfortunatey, it appears to swing back the other way in 2007.”

However, more technology is coming. General Motors Corp., for example, will bring two-mode hybrid versions of its V-8-powered Chevrolet Tahoe and GMC Yukon fullsize SUVs late next year. The ’08 Tahoe and Yukon offer a 40% improvement fuel economy in city driving and a 25% improvement overall.

“It’s all up to the driver, but that number could go up 30%,” says Gary White, GM North America vice president-vehicle line executive, fullsize trucks, during a recent product preview.

The system uses to variable degrees a combination of electric power and V-8 engine power with cylinder deactivation.

On 2-wheel drive versions, the SUV’s city fuel economy improves 50% over its 5.3L non-hybrid siblings, and rates competitively with the ’08 Toyota Camry sedan, GM says.

Chrysler will put the same two-mode hybrid technology in its ’08 Chrysler Aspen and Dodge Durango fullsize SUVs.

Ford Motor Co. already offers full-hybrid versions of its Ford Escape and Mercury Mariner cross/utility vehicles and in 2008 will bring that technology to its Ford Fusion sedan. Further down road lies TwinForce, an efficient twin-turbo V-6 that delivers the same power as a V-8. The engine is expected in its next flagship sedan.

European and Asian auto makers, meanwhile, will roll out a number of clean diesels next year to complement the hybrids that exist in their portfolios.

The industry’s fuel efficiency numbers also have benefited from a shift in consumer preference from larger trucks and SUVs to smaller, more economical passenger cars, the EPA report notes. Historically, the agency points out, growth in the light-truck market has been driven by the popularity of SUVs.

In fact, market share for SUVs increased from less than 10% of the new light-duty vehicle market in 1990 to about 30% of vehicles built each year since 2003, EPA says. And light trucks, the agency adds, typically average 5-7 mpg (47.0 L-33.6 L/100 km) less than cars.

The EPA estimates a 49% market share for light trucks in 2007, slightly off their peak of 52% in 2004.

The Alliance of Automobile Manufacturers, Washington-based lobby group, says those numbers reflect an effort by auto makers to balance the need to improve fuel efficiency and meet broad consumer demands.

“The EPA numbers are especially impressive considering the fact that more and more these days consumers are choosing large cars, trucks and SUVs to meet their needs,” a spokesman for industry group says. “And you still see the fleet-wide average improve.

GM would agree. “It shows we’ve been improving fuel efficiency all along and building vehicles that people want to buy,” a spokesman tells Ward’s.

At the same time, he says the fuel-efficiency improvement contained in the EPA report shows the gains are “incremental” and “hard-fought.” The clear suggestion, the GM spokesman adds, is that the Senate’s CAFE proposal is unreasonable.

“The standards proposed in the Senate far exceed what auto makers can attain in their timetable,” he says.

The industry favors a House bill that keeps cars and trucks separate. That proposal, which won the backing of 163 lawmakers earlier this month to kill a stricter rival bill, would raise the standard on cars to 35 mpg (6.7 L/100 km) and bump trucks up to at least 32 mpg (7.4 L/100 km) by 2022.

Whatever the standards, the ASE’s Ungar says the EPA report shows when pushed, auto makers can deliver.

“There are technological solutions out there,” he says. “They may cost more inititally, but they save money in terms of overall value. Unfortunately, that’s not reflected in the marketing of the industry.”