Potential Cost Savings and Additional Benefits of Convergence of Safety Regulations between the United States and the European Union

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This report examines the costs of divergent safety regulations in the United States and the European Union and highlights the economic impacts of having two different regulatory regimes. With the shift to a to a global-vehicle strategy by most automotive manufacturers, differences in safety regulations in the United States and the EU require automakers to manufacture distinct versions of each vehicle model to conform to the regulatory requirements in each market. Modifications add cost, and the cost of compliance with two divergent regulatory regimes exceeds the cost of tariffs. CAR’s research concludes that two the different regulatory regimes cost the automotive industry $3.3-$4.2 billion per year. Reducing the cost of compliance would benefit consumers through both lower new vehicle prices and more models from which to choose. The report also compares mutual recognition and harmonization as the two most likely approaches for increasing regulatory consistency and, ultimately, achieving cost savings and potential additional vehicle sales