Auto-industry executives often say that the market tells them what cars and trucks to build.
That may have been wholly true in simpler times. But for a long time now, regulators also have been telling them what to build.
From drawing board to recycling yard, every car produced in Europe is shaped by about 80 directives drafted by European Commission bureaucrats.
That number has mushroomed from about 60 when we began publishing 10 years ago, according to the the Society of Motor Manufacturers and Traders, the UK’s auto industry association.
The industry consensus is that the number will increase again over the next 10 years as advances in automotive technology require still more oversight.
“Environment and safety are the two areas where regulation has been increasing the most,” said Ivan Hodac, secretary-general of ACEA, the European carmakers association. “This will continue.”
The European Union-wide directives range from the densely technical to the merely picky; from allowable structural crush rates in an accident to rear-view mirror placement. By setting the rules that frame the options of industry engineers and designers, Brussels has as big a hand in shaping new cars and trucks as the automaker’s design studios.
Consider doors. Rule 3.2 of directive 70/387 amended in 2001 specifies that door hinges must be “capable of withstanding a longitudinal load of 1134 kp (1111 daN) and a transverse load of 907 kp (889 daN) in both directions.”
Although that rule may be as impenetrable as Sanskrit to most people, it has the real-world effect of limiting the materials an engineer can use in developing a vehicle-door hinging system.
In turn, that affects weight and cost, which, domino-like, can influence styling or performance decisions.
Grilles? Rule 6.3.1 of directive 74/483 amended in 2003 specifies that the distance between elements forming part of an air intake or radiator grille not exceed 40mm. Further, “For gaps of between 40mm and 25mm, the radii of curvature shall be 1mm or more; for gaps equal to or less than 25mm, the radii of curvature of external faces of the elements shall not be less than 0.75mm.”
Body styling? Rule 6.9.1 of directive 74/483 specifies that “Folds in body panels may have a radius of curvature of less than 2.75mm, provided that it is not less than one-tenth of the height ‘H’ of the projection, measured in accordance with the method described in Annex II.”
You can’t make up this stuff.
Going too far?
Although Europe is far from alone in setting auto-industry standards – the US, Japan, Korea and Europe in fact are working hard to harmonize their regulations – European executives complain that Brussels has gone over the top.
“Cars in Europe are overburdened with regulation,” PSA/Peugeot-Citroen CEO Jean-Martin Folz told the French Parliament at a
hearing in December.
Rules developed over the past 10 years set standards for pedestrian-safe front ends, CO2 emissions and recycling. Older directives, such as those on the reduction of emissions of nitrogen oxides and particulates, have been amended regularly.
Complying with regulation is costly. For example, it will cost the auto industry E40 billion to switch from hydrofluorocarbon- to CO2-based refrigerants for climate control systems, estimates Hikaru Sugi, head of air conditioning specialist Denso’s thermal systems division.
Gilles Michel, PSA’s executive vice president for platforms, engineering and purchasing, estimates that adapting diesel cars to new Euro 4 emissions standards costs “hundreds” of euros per vehicle. And the Euro 4 standards, which took effect only last year, will be replaced by even tougher Euro 5 rules in 2010.
Auto executives complain loudest about what they call Brussels’ inconsistent and disjointed approach to regulation.
For example, they point out that lower limits for CO2 emissions will require more fuel-efficient cars. But at the same time, new regulations for pedestrian safety are forcing automakers to add weight to cars, which increases fuel consumption.
Similarly, they say, the directive requiring that 85 percent of a car be recyclable beginning this year also will impact fuel efficiency and emissions. That’s because automakers will have to reduce their use of lightweight plastic, which is difficult and sometimes impossible to recycle.
“We need type approval,” says ACEA’s Hodac. “The issue is not so much what to regulate, but how it’s done.”
In a bid to address those concerns, the Commission last year formed a working group of legislators and industry executives to recommend ways to streamline regulations and reduce their harmful impact on companies.
The group, Competitive Automotive Regulatory Systems for the 21st century, or CARS21, issued a 10-year industry road map on December 12 that calls on Brussels to more thoroughly weigh economic costs when drafting industry regulation.
The report included a number of key recommendations.
1. The EU should formally analyze the cost of new regulations against their effectiveness. For instance, carmakers argue that the cost of complying with some specific nitrogen oxide and particulate emission reductions in Euro 5 standards for 2010 is far greater than the benefits derived.
2. Legislation should set targets, but not specify which technologies must be used to meet them. For example, past laws forced governments to buy a set number of electric cars even though the technology was a flop.
3. EU and United Nations regulations should be harmonized to help reduce the cost of adapting cars to different markets. And
obsolete rules should be updated or eliminated.
4. Lead times should be predictable because of the industry’s long development cycles. For example, carmakers
say they need at least three years to adapt to Euro 5 rules, not 18 months as the EU proposes.
5. The responsibility for reducing greenhouse emissions should be shared by other stakeholders, such as oil companies. Bernd Pischetsrieder, Volkswagen group chairman and chairman of ACEA at the time the report was issued, hailed the CARS21 blueprint as a “good start” toward improving the competitiveness of the European auto industry.
“We now have a clear road map for the next 10 years,” he said. “Our industry needs to regain profitability at home in order to be able to compete globally.”
Bernd Gottschalk, president of the German auto industry association, the VDA, said Brussels has taken a step in the right direction by listening to the collective view of the auto industry.
But he cautioned that regulatory reform must not remain an empty promise.
“With CARS21, the Commission has created a good starting point for the automotive industry,” Gottschalk told ANE.
“Now we have to make sure that the ‘better regulation’ promised to us will result in a more attractive environment for production and sales,” Gottschalk said. “Better regulation often means less regulation. Many things can be better handled locally than in Brussels.”