ACEA

Streamlining Regulation: Cost-effectiveness, impact assessments and harmonisation - the key to ‘better regulation’

The automotive industry is one of the most regulated sectors in the EU due to its highly complex products and the many issues that must be considered relating to vehicle use. Most rules define detailed technical prescriptions for which the specialist knowledge of automotive manufacturers is essential.

Regulation helps set common rules and standards which ensure a level playing field and fair market conditions in the EU and abroad. However, regulation can also damage the competitive strength of an industry. This is especially true if there is no common framework to detect conflicting interests of different regulations. Competitiveness can also be affected by regulation which is not properly assessed for effectiveness and where potential side-effects have not been identified. Without these checks, regulation can lead to high unnecessary costs, an unnecessary burden and competitive disadvantage for auto makers.

The European Commission has recognised the risk of over-regulation in the automotive industry and pledged to take action. With CARS 21, an important tool was established that is proving its value, and especially, in times of economic turbulence. However, despite progress, the CARS 21 principles still need to be applied much more coherently throughout European legislation.

Approaching 2015, manufacturers face a barrage of new rules on emissions and safety. These include tighter emission limits, new car CO2 rules and complementary measures, like tyre pressure monitoring and gearshift indicators. On safety, phase 2 of legislation on pedestrian protection will come into force and electronic stability control, advanced brake assist and daytime running lamps will become standard kit.

This means heavy investments for manufacturers. But that comes at a price. Clearly, vehicles need to remain affordable and policy makers cannot ignore the costs to consumers and the effect this may have on achieving policy goals.

What is ‘Better regulation’?

The European Commission launched the Better Regulation initiative in 2002. The aim was to “ensure that the regulatory framework in the EU contributes to achieving growth and employment, while continuing to take into account the social and environmental objectives, and the benefits for citizens and national administrations.” This should be achieved through simplifying and improving existing regulation and by ensuring new regulation follows better drafting principles.

The ‘better regulation’ agenda of the Barroso Commission is of great importance to auto manufacturers. In general, regulation is ‘better’ when it is more efficient. That means ensuring social and environmental goals are well balanced against economic objectives to support growth and jobs. It also means achieving policy goals at the lowest possible cost.

Regulations concerning the auto industry will, by nature, mostly concern technical measures. However, technical requirements can only be effective when part of a balanced and comprehensive framework of broader conditions. Technological targets can never be an objective in itself; the overall, end-result should set objectives for individuals, as part of a series of carefully-planned integrated measures. Policies must also be technology neutral.

• Read more about better regulation and other issues under CARS 21 – A roadmap for the future – more relevant than ever

Part of a jigsaw

While technology continues to deliver greener, safer vehicles, it represents just one part of the jigsaw. Impact studies clearly show that the greatest benefits to the environment and safety come when all relevant stakeholders play their part in an integrated approach.

New technologies, like alternatively-fuelled cars for example, need the right quality fuels and a re-fuelling infrastructure; ecodriving techniques can significantly cut CO2 emissions (and save owners money); fleet renewal is driven through fiscal measures, scrapping schemes and clear government support for environmentally friendly vehicles. Investment in roads cuts congestion and supports traffic flow, while improved driver training and road traffic enforcement help save lives on European roads.

In the event that innovation comes under the spotlight, policy makers must be careful not to prescribe ‘technology winners’. Strong competition and a vibrant market are the best drivers of progress.

The automotive sector is unique in working to long lead-times and extended product life-cycles. Developing a car from design to production takes around five years with a further seven-year on-sale. It is not realistic for policy makers to design automotive regulation that does not allow manufacturers reasonable time to prepare for change.

As well as being heavily regulated, the auto sector is often forced to deal with rules that are unduly complex with high administrative costs for compliance. Simplifying existing legislation is much needed, particularly in areas like type approval. Where possible, the EU should seek harmonisation in an international context. An industry that devotes less time and resources to applying rules can devote more to what it is good at; developing cars, trucks and buses that are even safer and more efficient.

Policy makers must always be fully informed about the consequences of new proposals. Timely consultation and thorough impact assessments are therefore key, and must be at the heart of any new proposal. Consultation reveals the practical consequences of new policy proposals; thorough impact assessments highlight wider issues, like cost benefits and the potential for meeting objectives through alternative means.

It takes at least 5 years to develop a new car

Cars are highly complex and innovative products. Their development – from the concept to the engineering phase – takes up to 5 years. Engine development can take significantly longer and so does much of the strategic R&D in powertrains and fuels, in mobility and safety systems, and in materials and manufacturing processes.

Automotive manufacturing is a hugely complicated and capital-intensive process, involving a large, very diverse supply chain that feeds into highly sophisticated production lines. Once taken into production, most car models have a manufacturing cycle of up to 7 years during which investments are recovered. Manufacturers and their suppliers plan and allocate production capacity well ahead to facilitate timely production and the regular renewal of the car portfolio.

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To adjust automobiles to new legislative requirements, the auto industry needs sufficient lead-time ahead of the implementation of these new rules. The long development and production cycles must be taken into account to sustain the economics of automotive manufacturing. For models just ahead introduction or already in production, change is limited to ready-available technologies and this, within the technical and economic constraints of the car’s concept.

Vehicle Type-Approval

Before a motor vehicle can be registered and sold in the EU, it must comply with what is known as the Framework Directive for Whole Vehicle Type-Approval. This contains procedures such as safety and fuel economy tests and a long list of separate legislation that lays down the many technical requirements for motor vehicles. It also deals with individual components and the separate assemblies from which vehicles are made.

In addition, there is legislation with requirements for the use of motor vehicles. In all, more than 80 EU Directives and Regulations and an even larger number of rules in the international context, or UNECE, must be followed by auto makers.

last updated 19/05/2009

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