Reoccurring Legislative and Regulatory Trends Affecting Your Business

Some Legislative Proposals Follow Predictable Patterns

Among the greatest challenges of any business is the effort and skill required to stay current or even ahead of what is popular. Predicting trends and following their progress are key elements to success not only in business, but also in politics. Just as businesses are subject to consumer sentiments and economic fluctuations, timely legislative initiatives and popular regulatory proposals can be shaped by any number of national variables and are often broadly applicable. The following are several important legislative trends affecting the automotive specialty-equipment industry that continue to feature prominently in state and federal government agendas.

Clean Vehicle Incentives

In this election year, the price of gasoline has once again emerged as a national issue, topping the list of many voters’ concerns. In the name of emissions reduction and national security, the federal government has introduced initiatives to increase the fuel efficiency of new vehicles sold in the United States. The National Highway Traffic Safety Administration’s Corporate Average Fuel Economy (CAFE) program, instituted in 1975, is today being used as a tool to push new motor vehicles to be progressively more efficient, eventually reaching an average of 60 miles per gallon by 2025.

Incentive programs to reduce emissions and consumer dependency on petroleum are not unique to the federal government, however. Legislation to reduce the sale of gas guzzlers and remove older “gross polluters” was introduced in Rhode Island and Massachusetts. In New York, proposed legislation would create the Clean Vehicle Incentive Program, consisting of rebates and surcharges on the purchase of new motor vehicles based on their emissions.

Major auto manufacturers are not waiting for these proposals to become realities, however. As global oil production remains subject to unpredictable fluctuations, prices at the pump remain higher than ever. As the cost of operating a vehicle continues to require consumers to search for more fuel-efficient options, manufacturers respond to new market demands.

Large automakers are pouring resources into developing new technologies to increase efficiency while maintaining the performance and quality expected by American consumers. Most of these manufacturers are already pressing for production of vehicles that use traditional gasoline more efficiently while also introducing new and alternative fuel technologies. The push for increased fuel economy has already resulted in companies moving away from the traditional mantra of “no replacement for displacement” in favor of swap-ping V8s for turbocharged four- and six-cylinder engines.

The trend of legislation and regulation pushing for increased fuel economy is one that will continue to shape the new-car market and production offerings of major manufacturers for the foreseeable future.

The Burden of Increased Government Regulation

Increased government regulation is a major point of contention in politics today. The accumulation of requirements that must be followed when providing goods or services to a consumer has become increasingly burdensome. Many states create excessive and often costly roadblocks that inhibit the timing and efficiency of a business.

In Maryland and New York, bills to further regulate and track the manufacture and use of tires by imposing additional identification numbers goes beyond the sufficient checks to insure quality and safety. In Michigan, Oklahoma, South Carolina and Georgia, legislatures considered bills that would require installers to inform consumers of the use of mechanical aftermarket parts in the repair of their vehicles.

The time and paperwork required by these proposed regulations burden the already complicated process of auto repair and place a negative stigma on many parts that are often designed to be safer and more affordable than original-manufacturer equipment.

Hobby Cars as Revenue Sources

It has been four years since the collapse of the global economy, and the fallout from the ensuing credit crunch is still reverberating across the country. As budget shortfalls become a perpetual concern, states and municipalities continue to search for ways to raise revenue.

As a result of the perceived luxury status of collector cars, registration exemptions and specialty-use provisions become easy targets. In Virginia and Washington, legislatures attempted this year to raise funds by modifying annual fees imposed on the registration of collector vehicles. Additionally, in Maryland, a bill was introduced to increase the age of vehicles that qualify for registration as historical motor vehicles, thus decreasing the number of vehicles eligible for a reduced rate.

As all levels of government across the nation continue to work to protect public services while operating on reduced budgets, the exemptions classic-car hobbyists and enthusiasts enjoy will continue to come under threat.

Read the complete story in the August issue of SEMA News.