ACEA

Lead-time is Essential: Car's Concept and Production Phase Take up to 12 Years

Cars are highly complex and innovative products. Their development - from design to production logistics - takes up to 5 years. Their product cycle, or the time they are kept in production, comprises up to 7 years.

Vehicle and engine adjustments are hugely complicated and capital-intensive operations. Manufacturers and their suppliers plan and allocate production capacity well ahead to accommodate production and renewal of their car portfolio. To be able to adjust automobiles to new legal requirements, the car industry needs sufficient lead-time ahead of implementation of these new rules.

During the development phase, changes to a prototype are limited to implementation of ready-available new technologies within the technical and economic constraints of the car's concept. The possibilities for change become more limited in the execution phase. During the typical production life of a car, investments in capital and innovations need to be recovered. Modifications are only opportune in case of relatively minor requirements, such as software changes.

The extensive development and production cycles in the automobile industry imply that in 2009, the cars for the markets until 2014 have already left the drawing tables. Defining of the cars for 2015 and beyond is well on the way. Policy makers have to consider that the investments to comply with future legislation need to be made years before it comes into force. New legislation should all the more take account of what is technologically possible and cost-effective – both in the short- and in the longer term.

Lead-time: common practice

Significant lead-time is not an extraordinary or rare item in legislation. In the Euro 6 standards for reducing further nitrogen oxide from cars, adopted last year, a lead-time of around ten years was commonly accepted; the date of coming into force of Euro 6 for all new cars is 2015. Lead-time is also commonly adopted in other industrial sectors and world regions.

For example, the Japanese government has set new goals for CO2 emission reductions from cars in 2006. With 2004 as baseline, the date of entry into force is 2015, ensuring a ten-year lead-time for the automotive industry. The Japanese carbon goals translate into a vehicle emission target of 138 grammes CO2 per kilometer in 2015. This is ambitious, but echoes respect for the need for lead-time and planning security for the industry.

last updated 12/05/2009

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