New laws enacted in recent years in both North America and Europe require automotive manufacturers to meet increasingly stringent standards for fuel efficiency, vehicle emissions and vehicle weight. While the rules have been positively instrumental in reducing emissions – they have also added tremendous cost burdens at a time when automotive profits are already under significant pressure.
aPriori has been examining this issue to help our automotive customers better navigate the regulations and offset their negative profit impact. This is the first in a series of blogs on the topic – and it starts in Europe where even more stringent emissions standards are under consideration. As with most controversial issues, there is some misinformation out there about what the new regulations in Europe mean. We wanted to take the opportunity to separate the Facts and the Myths.
#1 FACT! Manufacturers must produce more efficient cars
European automotive manufacturers face the toughest emission rules in the world, with imminent new requirements from the European Union inevitably only serving to add significant pressures on the car industry.
European car manufacturers must produce more fuel-efficient cars.
Whether it’s to meet regulatory needs, consumer demands or to drive future growth, car manufacturers need to produce cars that are more fuel-efficient. The EU target of 95 grammes per kilometre for fuel consumption by 2020 – a reduction of 25g/km from the current requirement – has created consternation from many car manufacturers. And the possibility of long-term goals that reach as low as 50g/km are not out of the question. It’s a trend that many understandably think is set to continue.
On the plus side, European consumers are showing an accelerating demand to purchase more fuel-efficient cars, with fuel efficient SUVs performing particularly well. Fuel charges are high, with taxes averaging 70 percent per gallon, and naturally consumers want greater efficiency and cheaper bills.
More than ever automotive OEMs and suppliers need to be prepared to react to changeable and unpredictable market conditions. As they look for new growth areas, research and development is being geared to more efficient vehicles, new hybrids and new electric car models. So whether it’s driven by regulations, EU rules or consumer demands, the automobile industry needs to respond.
Want to learn more?
Download the whitepaper, How Automotive Manufacturers Can Navigate the Cost of Increased Government Regulation, to learn more about these issues, and about new strategies that can help automotive manufacturers navigate the cost impact of these requirements across the entire product development process. This whitepaper also presents ways to identify new cost savings on individual parts and products as well as entire product assemblies and platforms to offset the increased costs of new regulations.
Other posts in the European Automotive Facts and Myths series