What Are the Government Policies and Regulations Shaping the Auto Industry ?
The appearance, safety features, and overall performance of a particular vehicle are all controlled by “government rules and regulations” in the automotive industry. These rules and regulations also have the authority to raise production costs and control how vehicles are distributed.
This article will discuss tax policies that are in place in the automotive sector plus safety laws and environmental restrictions.
Environmental rules and regulations
It is not a secret that the automobile industry bears a large portion of the responsibility for air pollution caused by the release of hazardous gasses into the atmosphere. Therefore, the auto industry must protect the environment by reducing the amount of hazardous gasses that are released into the atmosphere. Therefore, some environmental regulations and standards apply to the automotive industry, including emission norms and limitations to protect our beautiful environment and mother nature.
Every country on the planet has put strong laws and regulations in place to reduce air pollution and climate change, which are caused by the automobile sector. Examples of this are the EPA regulations in the USA and Euro 6 in Europe.
Environmental Impact Assessments (EIAs) are carried out to evaluate the possible environmental effects of manufacturing operations. Emissions of greenhouse gasses (GHGs), in particular carbon dioxide (CO2), have been measured to measure their contribution to global warming.
Significant advances in automobile technology have resulted from these policies, including the widespread use of hybrid and electric cars (EVs), cleaner fuels, and the creation of emission control technologies like catalytic converters.
Rules and regulations about the safety
Even though the automotive industry is seeing daily advancements in vehicle technology, passenger safety cannot always be guaranteed. As a result, nations all over the world have put laws and regulations in place to ensure safety measures.
In the USA, they have established centers like the National Highway Traffic Safety Administration (NHTSA), the National Transportation Safety Board ( NTSB ), and the Department of Transportation to Create And Enforce regulations to ensure the safety of automobiles.
Strict rules and regulations apply to parts like tires, wheels, brakes, lights, and gears to minimize collisions and lower the number of casualties and property damage. Regulations also govern the integration of safety elements including airbags, seat belts, anti-lock braking systems (ABS), and electronic stability control (ESC), as well as crash testing and occupant protection. These guidelines are intended to lower the accidents and increase the safety of the passengers.
Rules and regulations for autonomous vehicles
The Federal Automated Vehicles Policy was released by the federal National Highway Traffic Safety Administration in 2016.
Let’s discuss some of the laws and policies that various nations have set on self-driving cars. In Germany, guidelines for autonomous vehicles have been released by the German Federal Ministry of Transport and Digital Infrastructure, emphasizing data protection, liability, and safety standards. To make room for autonomous driving technologies, Japan has amended several of its current regulations, such as the Road Transport Vehicle Act and the Road Traffic Act. Additionally, Japan launched the Strategic Innovation Program (SIP) to encourage the growth of autonomous driving technology research and development.
To help the advancement and implementation of autonomous vehicle technology, the US Department of Transportation has released guidelines and policies. The National Highway Traffic Safety Administration (NHTSA) has asked for public feedback on the safety principles of autonomous driving systems and has proposed safety requirements.
China has imposed restrictions on road testing and developed pilot zones and testing areas for autonomous vehicles. Additionally, the nation has implemented rules to support research and development, such as tax breaks and financial aid for companies that produce autonomous vehicles.
Tax policies
Vehicle taxes have changed over a long period and are influenced by several factors besides the requirement of generating income. The level and composition of taxes have been influenced by policy issues related to geography, industry, society, energy, transportation, urbanization, and the environment.
When purchasing a new car in Europe, the amount and structure of taxes differ significantly around the countries and states in the continent.
These taxes include sales tax, excise duties, value-added tax (VAT), and other fees and taxes. The fundamental cause of the significant variations in car pricing across Europe before and after tax is not the rate of value-added tax. This is mostly due to additional taxes, fees, and bonuses.
The way that taxes on automobiles are distributed has also changed. When several of these taxes were implemented, automobiles were seen as luxury goods. Over time, a growing number of low-income households have acquired a car, which has resulted in a decrease in the progressivity of vehicle taxes.
When purchasing a new car, consumers in the majority of EU countries pay either 20% or 21% VAT. Only six nations have a VAT rate higher than 23 percent.
This article discusses the laws and policies set in place by the government to raise standards in the automotive sector. I hope you find this post to be useful.
References and further readings
Sohailkhan2k (2024) Environmental regulations for auto manufacturers. https://green.org/2024/01/30/environmental-regulations-for-auto-manufacturers/.
plant automation technology (2024b) The influence of government policies on the automotive industry. https://www.automotive-technology.com/articles/government-policies-on-the-automotive-industry.
Total disruption: autonomous vehicles, safety regulations, and new policy | Urban SDK (no date). https://www.urbansdk.com/blog/autonomous-vehicles-safety-regulations-policy.
Advanced driver assistance: Autonomous vehicle laws (no date). https://www.iihs.org/topics/advanced-driver-assistance/autonomous-vehicle-laws.
Regulations for Autonomous Vehicles: We’re just getting started (no date). https://shotl.com/news/regulations-for-autonomous-vehicles–were-just-getting-started.
Research Guides: Automotive industry: A research Guide: Industry Regulations (no date). https://guides.loc.gov/automotive-industry/regulations.
Goldberg, P.K. (1994) ‘Trade policies in the U.S. automobile industry,’ Japan and the World Economy, 6(2), pp. 175–208. https://doi.org/10.1016/0922-1425(94)00013-1.
Yoshida, Y. and Sasaki, Y. (2023) ‘Automobile exports: Exchange rate, export price, and retail price,’ World Economy [Preprint]. https://doi.org/10.1111/twec.13422.
Yanatma, S. (2023) ‘Which European countries pay the least and most tax on cars?’ Euronews, 26 December. https://www.euronews.com/business/2023/12/26/which-european-countries-pay-the-least-and-most-tax-on-cars.
