Cost Is No Object When It’s For Our Own Good

November 20th, 2007 Posted in Auto Industry, Eric Peters

So far, at least, we’re still free to choose whether to exercise – or not. We can also decide for ourselves whether to engage in “risky” sports – for example, skiing (or motorcycle riding).

But we’re not allowed to decide for ourselves when it comes to our cars – which must, by law, come equipped with a multitude of features designed to make them “safer” – even if the risks are (increasingly) remote and theoretical while the cost of protecting against them very real.

And very high.

Since the mid-1990s, when driver and passenger air bags became mandatory, the estimated “add-on” cost of government-required safety features adds at least $1,000 per car in direct manufacturing costs – plus “lifetime” costs (servicing, repairing and replacing these components) double or triple the initial costs.

As an example, when an air bag-equipped car is involved in an accident and the bag(s) deploy, the repair costs (both bags and all related components have to be replaced, including the steering wheel and dashpad, etc.) for these components alone can amount to several thousand dollars. That’s before even considering any actual body damage to the vehicle.

It’s not uncommon for an otherwise repairable air bag-equipped older vehicle to be “totaled” by the insurance company – because the cost of replacing the air bags, along with the body damage, exceeds fifty percent of the retail value of the vehicle.

It doesn’t take much to incur $3,000 worth of damage to a car these days – and if the car itself is only worth $5,000 or so, it’s doomed.

The owner’s left with a check that might buy a down payment on a replacement — but not a replacement vehicle.

Higher repair costs have also increased the cost to insure late-model vehicles equipped with air bags – and these costs will only go up as vehicles are fitted with even more complex/expensive technology that may be damaged and have to be replaced in the event of an accident.

Of course, if an air bag saves your life – or prevents a major injury – you won’t be worried much about the costs involved. However, most of us do not have unlimited means – and at some point, cost has to be taken into account — “reduced risk” notwithstanding.

All the technology in the world does you absolutely no good if it’s so expensive you can’t afford to buy it.

And things are headed in that direction.

In addition to driver and passenger frontal airbags, many new cars also come equipped with side-impact and curtain air bags – even knee airbags – for as many as six to eight air bags, all told. Side-impact and curtain air bags aren’t mandatory — yet — but odds are good they will be made so within the next few years.

The same is true of technologies such as electronic stability control – the mandating of which is already under discussion in Congress. As are remote camera back-up monitors via the Cameron Gulbransen Kids and Cars Safety Act.

The problem is the quest for the perfectly safe car is a quest of diminishing returns.

Seat belts, padded dashboards and safety glass didn’t cost much to put into a car — but provided a dramatic increase in occupant protection during a crash. As we move down the line to things like a baker’s dozen air bags and multiple electronic countermeasures (stability control, lane departure warning systems, etc.), we see much more up front cost (and down the road “peripheral” costs) with an ever-diminishing real-world return in terms of lives saved and injuries prevented.

For example, proponents of the proposal to require all new cars be fitted with closed-circuit back-up cameras point to fewer than 200 injuries (and even fewer deaths) that could have been (in theory) prevented by back-up cameras. An argument could be made that had the drivers involved in these tragedies simply taken the time to make sure no small children were in the path of the vehicle before they moved the shifter lever into Drive, the injuries and deaths could have been avoided – without the need for complicated and expensive technology.

And is it reasonable to impose a cost of several hundred dollars per car (for this one bit of technology alone) to address a “risk” that, at most, might affect a few hundred people out of a nation of 300 million?

If it is, then at what point do we call a halt? If it can be shown that a single life might (in theory) be saved by the mandating of “technology x” – will that be enough to make it so? Irrespective of the cost involved?

It’s hard to nail the figure down precisely, but there’s little doubt the average 2007 model car or truck is carrying at least $2,000 in additional “up front” costs for recently-mandated safety equipment — as well as ever-higher “lifetime” costs (insurance premiums, repair and maintenance, etc.). Add side-impact/curtain air bags, back-up cameras, lane departure warning, intelligent cruise control and stability control to the equation and it’s probably low-balling it to say $4,000 per vehicle in government-mandated (or potentially soon-to-be-mandated) safety gear.

The irony of it is that as new cars become ever-safer (in theory), the more costly they become (in fact) and, accordingly, the stronger the incentive to keep “old faithful” – even if she hasn’t got half a dozen air bags and multiple electronic fail-safes mandated by cost-no-object legislators.

At least she’s paid-for.

This is a guest post by automotive columnist Eric Peters, check him out on the web at www.ericpetersautos.com.

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