Smoothing the Road for Car Sales Worldwide
In the beginning, there was Henry Ford, the Model T and some headlights. But it wasn’t long before drivers began tinkering with the lights, designers got too creative and governments felt obligated to step forward in the name of public safety.
Decades later, in an age of transoceanic trade and cross-border manufacturing, the seemingly mundane matter of auto lights has become inordinately complicated.
In the United States, where road signs are usually on the side or above the roadway, headlights must shine straight ahead and their luminescence is strictly limited. Brake and rear turning lights can be amber or red.
In Europe, where tree-lined boulevards and outdoor cafes are popular, governments require that headlights shine down onto the road to avoid blinding pedestrians. And to avoid confusion among adrenaline-pumped drivers, the rear turning lights must be amber-colored and the brake lights red.
“Headlights are a huge quasi-political issue from country to country,” said Andrew Card, president of the American Automobile Manufacturers Assn.
As such, headlights are emblematic of an industrial and political can of worms.
Over the years, such conflicting rules--over lighting, brakes, windshield wipers and hundreds of other items--have caused bureaucratic confusion, engineering frustration and mounting expense for auto makers.
Similar, often-obscure conflicts are faced by makers of literally tens of thousands of products, a phenomenon that has grown geometrically with the explosion in international trade.
How can companies build complex products efficiently when they have to customize them for every country? On the other hand, how can regulations be standardized across countries without nations losing sovereignty over their laws and policies?
After years of halfhearted discussions, members of the Washington-based AAMA and their European counterparts agreed last week in Washington to develop mutually recognized regulatory standards and to harmonize safety and environmental requirements.
Those would include mutual recognition of items already regulated by both sides such as safety belt systems and windshield wiping systems. On the environmental side, the auto makers urged, among other things, the harmonization of noise and emission standards.
“This is the first time it’s happened with a strong political will behind it,” said Vann Wilber, director of vehicle safety and international affairs for the AAMA.
A similar movement is taking place in other industries, from telecommunications to pharmaceuticals, as manufacturers discover that the costs and headaches of conflicting standards and testing requirements multiply dramatically when they expand operations across borders.
But the pressures are particularly evident in the U.S. automobile industry. While the Big Three trumpet their American roots in marketing campaigns and political lobbying, their profits are increasingly dependent on markets, government regulations and business partners beyond U.S. borders.
Establishing global automobile standards and internationally accepted testing certification programs would save manufacturers billions of dollars by eliminating the need for the costly reengineering of products for specific markets, according to the AAMA.
Take braking standards. In Germany, vehicle brake manufacturing and testing standards are designed for highway speeds exceeding 100 mph. In the United States, the brakes are designed for much lower speeds.
Safety requirements also vary widely. The United States is the only country that requires air bags. In Europe, where more than 90% of the passengers wear seat belts, there is no air bag requirement.
The Society of Automotive Engineers, which establishes design and safety standards worldwide, has 6,000 standards on its books. Each year, 400 to 500 new standards are added to that list. At its annual meeting in Detroit in February, harmonization of standards was a hotly debated topic.
It will be a bureaucratic challenge, to say the least.
Here in the United States, for example, a broad array of federal and state agencies is involved in regulating the manufacture, sale and operation of automobiles, including the Transportation Department, the Environmental Protection Agency, the Commerce Department and countless state-level agencies. The same competing interests exist in other countries.
The United States and its industrialized partners are particularly worried about emerging markets in Asia and Latin America, where governments have sometimes crafted standards to keep out foreigners and to protect uncompetitive domestic companies.
“This is very much an area where the U.S. and Europe are way ahead of the curve of other countries,” said Gary Hufbauer, trade analyst at the Washington-based Institute for International Economics. “It behooves us to get some kind of international system before you get a whole bureaucracy in other countries that is in the business of designing these from scratch.”
Last year, the National Academy of Sciences conducted a study of the international standards issue and collected data on the more than 90,000 manufacturing standards that exist in the United States alone. Rather than try to harmonize those standards, the group recommended an international test certification system. That would make it easier for companies to meet the standards established in different markets rather than requiring all countries to reach agreement on a single standard.
Not everyone welcomes this effort. U.S. consumer groups say it gives too much power to multinational corporations and undermining the ability of countries--and states, for that matter--to set their own standards.
This is of particular concern in California, whose safety and environmental standards are among the toughest in the world. Recently, for example, Japanese and U.S. auto companies joined together to win a delay in the state’s requirement that they begin building and selling electric cars.
“My observation in the regulatory area is they [the U.S. and foreign auto makers] have gotten increasingly together in fighting things like fuel economy standards and electric vehicle mandates,” said Clarence Ditlow, director of the Washington-based Center for Automotive Safety.
But David Cole, executive director of the Office for the Study of Automotive Transportation at the University of Michigan, argues that this trend is an inevitable and long overdue consequence of the internationalization of the U.S. economy.
“Most people have for some time had a philosophy where they would cooperate and compete in the same world,” he said. “The Americans are now learning to do that.”
