Study: Overlapping EU-U.S. Safety Rules Waste Up to $2.3 Billion

Carmakers are wasting as much as $2.3 billion (€2.5 billion) annually to meet divergent safety standards in the U.S. and European Union that provide virtually identical benefits, according to research by the Ann Arbor, Mich.-based Center for Automotive Research.

The report, which was produced for the Alliance of Automobile Manufacturers, urges the two markets to accept each other’s existing safety standards to reduce the duplication. CAR also suggests the regions coordinate future rulemaking to increase the savings.

In 2014 carmakers spent between $3.3 billion and $4.2 billion to bring vehicles sold in both regions into compliance with each market’s safety standards, according to CAR. But it estimates roughly 40% of those costs involved satisfying minor differences in standards that have little or no impact upon a vehicle’s overall safety.

CAR's analysis of 116 affected “vehicle variant” groups concludes the wasted spending exceeded the $1.6 billion in tariffs imposed on cars shipped between the two markets in 2014. AAM is pushing negotiators of the Transatlantic Trade and Investment Partnership trade deal to include mutual recognition of overlapping safety rules.

Doing so would enable carmakers on both sides to reduce per-vehicle costs by $650 (€585) or more, the study estimates. Accepting each market’s standards also would enable manufacturers to offer more of their models in both regions.