The role of government in controlling auto manufacture

To get a clear view of this subject, here’s a simplified explanation. As a matter of public policy, federal and state governments have an interest in making the roads safer. For their own commercial reasons, insurers want to reduce the amount they have to pay out for repairs and personal injuries, so want the vehicles easier to repair and safer for the driver and passengers. Let’s start off with the government’s role in a little more detail. The way the state’s set up depends on a balance of power. There are three groups who are supposed to represent checks on each other to ensure no one group gets too powerful. Big clue. This is why there’s a logjam in Washington right now. The three groups are the policy-making President and the other members of the executive. Then come the lawmakers who sit in Congress and the House of Representatives. Followed by the Courts which can declare the actions of the other two unconstitutional.

So how does it work? It starts at the top with leaders proposing laws, say, unfair-trade practices and consumer protection laws to protect you, the consumer, from deceptive advertising. If the lawmakers agree, a statute appears. If you feel a manufacturer has broken the law, you can sue. An example of this is the current action in Pennsylvania against Ford for misdescribing the mileage of the 2013 Fusion Hybrid shown below. If you look at the marketing copy, you’ll see Ford claiming 47 miles per gallon. If true, this would mean the Ford models delivered better fuel economy than the other hybrids on the road. The law suit alleges the actual fuel economy is 17% below the claimed level.


A part of the problem is that Ford has the apparent support of the US Environmental Protection Agency for its claims. For better or worse, the EPA has a role in assessing the fuel efficiency of the vehicles on the road but it’s not necessarily the most expert organization on engineering and the measurement of performance. As it says in comments relevant to this case, it’s more difficult to measure the fuel use accurately in hybrids. This is going to be an interesting case for the courts to resolve — judges are not engineers or research scientists either.


As a further example of the problem for government, let’s come to the National Highway Traffic Safety Administration (NHTSA) which is part of the US Department of Transportation. Introduced under pressure from Ralph Nader, this licenses vehicle manufacturers and importers, and is responsible for enforcing the Federal Motor Vehicle Safety Standards. It came under scrutiny because of the way it handled the problem of sticking accelerator pedals in Toyota vehicles such as the Camry shown above. The problems were being resolved quietly with the manufacturer cooperating with the NHTSA when there was an explosion of media excitement. Transportation Secretary Ray LaHood, a Republican in President Obama’s Cabinet with no technical experience, then demonstrated the problem when politicians try to speak authoritatively about the reliability of vehicles subject to a recall.

Against a background in which ABC News faked parts of its news reports about the problem, the NHTSA eventually concluded most of the accidents were caused by drivers mistaking the brake for the accelerator. More recently, there were new problems alleged with cars that would not stop. Here’s a sixteen year old that finds himself caught up in a real drama involving a 2011 Hyundai Elantra.


Working alongside the NHTA are the Insurance Institute for Highway Safety and the Highway Loss Data Institute. These are non-profit organizations funded by the insurance industry to research ways of improving safety and reducing the injuries of people using public roads. Here’s an example of their work:

The important point to recognize is that this video is both an attack on the truck manufacturers and political pressure on government to take action to first enforce the existing regulations, and look for ways of forcing stronger regulations through. When you watch the video, it all sounds very reasonable but, of course, the insurers are motivated by profit to campaign for manufacturers to spend money redesigning their trucks. This boosts the retail pries which get passed on to all consumers whose products are distributed by road. So we all end up paying more to protect against the few accidents when drivers crash into the backs of trucks. It’s not a neutral research operation and this complicates how politicians and voters should react. On balance, it’s good there’s an extra group out there with the muscle to threaten the motor manufacturers. Anything that forces manufacturers to make the world a safer place is to be encouraged even if the motives are not necessarily pure.

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