On Dec. 8, 2015, the U.S. Department of Transportation proposed upgrading the National Highway Traffic Safety Administration (NHTSA) 5-Star Safety Rating system for new vehicles by adding new standards for accident-avoidance technology, which will make it much tougher for OEMs to achieve a 5-Star Rating. The agency will collect public comments for 60 days, then issue a final decision notice on the planned changes by the end of 2016. If approved, the new crash-test criteria will be implemented for the 2019 model-year. “NHTSA’s 5-Star Safety Ratings have set the bar on safety since it began in 1978, and today we are raising that bar,” said U.S. Transportation Secretary Anthony Fox.
But, what are the fleet implications of this raised bar?
Increased Pressure to Add Safety Technology
The NHTSA 5-Star Safety Ratings, also known as the New Car Assessment Program, was the world’s first-ever vehicle safety rating system that was subsequently modified and adopted in all major automotive global markets. Every year, NHTSA crash tests new vehicles and rates them on how well they protect occupants in frontal, side, and rollover crashes. The test results are compiled into a rating of 1 to 5 stars, with more stars indicating a safer car. These safety ratings appear on Monroney stickers of new vehicles, and are also searchable on NHTSA’s Safercar.gov website.
Today’s program does not require crash-avoidance technologies to earn a four- or five-star rating from NHTSA. But, NHTSA’s new proposal, if approved, will take crash-avoidance technologies into account when it crash tests new cars in MY-2019 to determine how well they protect drivers and occupants. Also, starting with testing for 2019 model-year, an additional 5-Star Rating will be added to evaluate technology designed to protect pedestrians. The two safety technologies that would fall under the “pedestrian protection rating” category are pedestrian automatic emergency braking and rear automatic braking. NHTSA hopes that adding a pedestrian-safety component to ratings will give manufacturers an incentive to incorporate pedestrian protections in U.S. models, which have already been incorporated by several OEMs elsewhere in the world.
The new assessments of crash-avoidance technologies will include lane-departure detection, automatic emergency braking, frontal-collision warning, blind-spot detection, and visibility-related elements, such as high-performance low-beam headlights. Although these features are increasingly common in new vehicles, there is currently no way to assess which company’s equipment performs best. NHTSA wants to change that with its new ratings system. Another planned change to the 5-Star Safety Ratings system will be to add half-star increments to the star rating score.
As a result, the proposed crash-testing criteria will cause some OEMs to receive lower scores if their vehicles do not utilize these safety technologies. By making it harder for cars to get top rankings, the government hopes to encourage OEMs to expand the adoption of these safety technologies in more vehicles, not just the top-of-the-line models or only in higher trim levels or option packages. The lack of availability of these features as standard equipment in popular fleet models is an ongoing complaint from fleets that want to spec safety equipment, but are forced to add undesired items that are bundled into option packages.
The underlying hope is that NHTSA’s new test criteria will eventually pressure OEMs to make this equipment standard in all models similar to what occurred with air bags, electronic stability control, and rear-view parking cameras. The argument is the proposed crash-testing criteria will stimulate faster adoption of advanced safety technologies by OEMs. In fact, in September 2015, 10 automakers voluntarily pledged to install automatic emergency braking in all future vehicles sold in the U.S. Other proponents of the new safety testing criteria argue it will increase the number of semi-autonomous vehicles on the road, facilitating the creation of a technology foundation to transition to fully-autonomous cars.
The Cost of New Vehicle Safety Technologies
Without a doubt these safety technologies are beneficial, but they cost money and will also exert upward pressure on new-vehicle acquisition costs. Although these safety technologies are not mandated, the new crash-test criteria will put tremendous pressure on OEMs to consider adding this equipment. I have argued for quite some time about impending higher acquisition costs that will impact fleets in coming years to meet government mandates. There will be a significant additional expense to meet 2025 CAFE requirements – which are mandated – resulting in far more expensive corporate fleet assets. In addition, there are future looming mandates, such as the DOT pledge to issue a rule requiring the use of vehicle-to-vehicle communication technology by the end of 2016, which too will additional cost to build a vehicle.
The cumulative “sticker shock” of these new technologies will inevitably cause renewed calls by management to increase driver eligibility to receive a company vehicle, re-examination of the viability of reimbursement programs, and downsizing overall fleet size. These safety technologies, along with other equipment required to meet existing government fuel economy mandates, plus anticipated forthcoming mandates, will ultimately be the catalyst for significant changes in the financial equation of offering company-provided fleet in coming years.
Let me know what you think.
Originally posted on Automotive Fleet