A group of unnamed car companies in the Alliance of Automobile Manufacturers tasked CAR with researching what kind of cost savings and benefits would come from more unified safety regulations between the European Union (EU) and United States. Currently, both regions have their own safety regulations. Many of the regulations are similar, but still different enough to require additional time and materials to meet the rules. These differences can apply to many aspects of cars, including lighting, air bags and even license plate mounting.
The study presents two ways of resolving the differences between each region's differing regulations. One is harmonization, in which both regions would change their rules to an agreed upon set for use in both areas. The other is mutual recognition, in which neither region would change their rules and would recognize both sets of regulations as acceptable. Then, when a car company builds a car, it can be sold in both markets as long as it meets one set of laws. For this study, CAR only looked at the mutual recognition option, saying that it would be the most likely option to be accepted by both regions.
In a mutual recognition system, a car could be sold in both markets as long as it meets one set of laws.
To get their information, CAR interviewed various industry insiders, and conducted detailed surveys and interviews with car manufacturers to get an idea of what it costs to develop cars for both places. According to CAR's research, in 2014 there were 172 model groups sold in both the EU and the US amounting to a total of 16.6 million car sales. The cost to homologate these cars for these regions was estimated at $3.3 to 4.2 billion. While this includes some vehicles from Asian automakers, narrowing the vehicle range to EU and US companies still resulted in cost estimates of $1.68 to 2.26 billion. The study also points out that in both situations, the costs of development for different regions is greater than that of tariff costs between locations.
These broad numbers are all well and good, but consumers may be more interested in the costs per automobile. CAR estimated this by figuring the cost of materials for each car sold in another region's market, and adding a product development cost. For European cars exported to the US, the cost was between $618 and $827 using the 2014 data. For American cars exported to the EU, the cost was $836 to $1,154. This data did not factor in the potential cost of lost sales based on increased price tags.
Establishing that such regulations are quite expensive, the CAR study noted that removing these barriers would have many benefits to both the industry and consumers. Among these are lower costs and lower barriers to entry for automakers, allowing for more and smaller companies to enter markets they couldn't get to otherwise. For consumers, they would have more options and access to either cheaper vehicles or vehicles with more or better technology. Certainly as car enthusiasts we would be ecstatic to see additional cars from other makers here on our shores. We would also love some of that nifty technology we don't get.
We would love some of that nifty adaptive lighting technology we don't get.
One recent example of technology that could come to our market would be the fancy adaptive LED headlights being offered in the EU. These lights are offered on Audi and Mercedes-Benz models and allow high beams to remain on, even if there is oncoming traffic. This is possible because the lights can dim individual LEDs so that the oncoming driver isn't blinded, but the rest of the road stays fully illuminated. US regulations don't allow for these lights, so they are not available here.
Overall, the CAR study recommends the adoption of mutual recognition of existing safety regulations, with an aim to further harmonize future laws. This way, the regions could remove trade barriers quickly, and be able to make more unified rules over time instead of having a major battle over whose rules are best right off the bat. The study also recommends further research into the effects of third-party testing groups such as the Insurance Institute for Highway Safety (IIHS), and the costs of emissions compliance for a more complete picture of regulatory costs.