Automotive Industry Trends
July 2003
Crash Costs & Consumer Demand Drive Advances in Auto Safety
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It’s summertime and lifeguards are on duty at neighborhood pools. But those in the automotive industry may recall one particular lifeguard back in 1956: the “Lifeguard” promotion by Ford Motor Co. touting the benefits of such features as seat belts and padded dashboards.
Since the early 1950s, safety has been a priority for the industry. Four factors, though, are combining to speed new and faster developments, according to Dan Holt, technology editor of publishing at SAE International (Society of Automotive Engineers) and a 24-year industry veteran.
“The first and most important factor is the horrific loss of life behind the wheel,” he says, “and the second is the economic cost.”
Indeed, last year’s report by the U.S. Department of Transportation’s National Highway Traffic Safety Administration tallied nearly 42,000 fatalities and more than 5 million injuries in car crashes on America’s roadways (based on data for calendar year 2000)1. The economic impact topped $230 billion, or an average of $820 for every person living in the United States. The report put the average cost of each fatality at $977,000 and of each injured crash survivor at just over $1.1 million.
During the past 50 years, says Holt, government and the automotive industry have worked together to create vehicle safety standards that have helped save lives and reduce societal costs. “But much work remains to achieve total safety or zero fatalities,” he adds.
Safe cars are good business
The third factor driving advances in automotive safety is the insurance industry. Insurance companies must pay tens of billions of dollars each year to cover medical costs and property damage, and these payouts are passed on to consumers in higher life, health and auto policy premiums.
In response, the Insurance Institute for Highway Safety conducts crash tests and rates new sedans, trucks and SUVs as they roll off assembly lines in Detroit and elsewhere. These highly publicized star ratings have become a differentiator, says Holt, a competitive advantage or disadvantage in an industry whose low-and mid-priced products have become commoditized.
“Differences in price and functionality have narrowed, so safety features often dictate the consumer’s purchase decision,” he says. “Safe cars are good business.”
Which brings us to the fourth factor driving industry’s commitment to safety: consumer demand.
Taking safety to the next level
“We consumers want safe cars, now more than ever,” says Holt. “Back in the ‘50s and ‘60s, many drivers resented seat belts – their very presence was somehow contrary to the spirit of the road at that time. But things are different now. Roads are more congested, and safety is top of mind for consumers.”
In other words, we still have a love affair with cars, but as in any serious relationship, we don’t want to get hurt. That’s why carmakers, safety companies, legislators and consumers will take safety to a much higher level in the years ahead, Holt says. He suggests we’re very close to making cars that avoid crashes, encircling drivers and passengers in a protective cocoon of sophisticated radar- and satellite-guided electronic instrumentation. But there’s a catch.
“Today’s top-of-the-line Mercedes-Benz may be one of the safest cars on the road, but how many of us would spend $100,000 plus for that level of safety?” asks Holt. “What’s a sufficient level of safety and how much will we pay for it versus ‘moons and toons’ sound systems versus navigational aids versus family-friendly features? Watch two things for the answer: consumer demand and car makers’ balance sheets.”
1 to read the news release and link to the NHTSA report, go to http://www.nhtsa.dot.gov