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President-elect Donald J. Trump Transition Team
Mitch Bainwol, President and CEO
November 10, 2016
The Automobile Sector -- Forging Public Policy for Even Safer,
Cleaner and More Transformative Mobility

INTRODUCTION
These are heady times for the auto industry and mobility in the U.S. New vehicle sales are strong,
employment is growing, safety technologies are now making it possible to prevent crashes
instead of just surviving them, research is ambitious and consequential, and technological
innovations are re-defining mobility as we know it. We have a keen understanding that what we
do – build vehicles that move America (and the world) – is critical to public safety, ensures there
is a growing economy and also helps to better protect our environment. Now more than ever,
sound public policy for the automotive industry is essential not only for our sector’s continued
success but for this country’s economic growth.
Sound public policy provides certainty so businesses can plan; it mitigates chaos so that rules are
clear and fair and equitably enforced; it relies on a commitment to established regulatory
practices like rigorous cost/benefit analysis; it provides timely and harmonized government
responses both within agencies and between agencies; and it recognizes the importance of
vehicle affordability for consumers as well as the corresponding efficiency and safety benefit to
the traveling public.
It’s in that spirit that we reach out to your Transition Team. This memorandum has two sections.
The first outlines the context for our industry as we head into 2017. The second offers some
policy recommendations for the Transition team to consider as you reflect on next year.

CONTEXT
GROWTH
2015 marked an unprecedented sixth year of sales growth and an all-time record for new vehicles
sales (17.5 million). 2016 could - potentially - be the seventh year of increased sales. The
combination of an aging fleet (average age of a car is now 11.5 years old), coupled with attractive

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incentives from manufacturers, low interest rates and longer financing terms has generated the
strength of this recovery. Yet we are a cyclical industry. Accordingly, we do not view growth as
an entitlement. Sustainable growth requires the development of compelling product on our part,
favorable economic conditions (including healthy disposable income, readily available and
inexpensive financing) and a regulatory framework that is securely grounded in common sense
at both the state and federal level.
PLANTS
Since 2008, four new manufacturing plants have been launched in the U.S. and there has been
substantial, multi-billion-dollar reinvestment in existing plants. New plants are located in:
Greensburg, IN (Honda), West Point, GA (Kia), Blue Springs, MS (Toyota), and Chattanooga, TN
(Volkswagen). Also, Volvo is slated to open its new plant in South Carolina in 2018. More broadly,
over the last decade (including 2005), six manufacturing plants opened in the U.S. while one plant
opened in Canada and five plants opened in Mexico. Given our highly competitive industry, plant
location choices reflect trade rules, sales patterns, port and infrastructure access, and cost
structure.
PRODUCT
Americans view automobiles manufactured today as significantly improved relative to a decade
ago, according to the Auto Index national tracking poll conducted monthly by the Alliance.
Ratings (better vs. worse) for quality (79-12), technology (93-2), safety (85-7) and fuel economy
(88-3) all are up profoundly. Especially in a low gas-price context, the types of vehicles that
Americans buy continues to evolve, reflecting functional lifestyle needs. As you can see below,
over the past fifteen years, CUVs (Crossovers) have picked up market share from each of the
other segments, with traditional passenger cars now accounting for just over 40% of new vehicle
purchases.

Year
Car
CUV
Pickup
SUV
Van

2015
43.3
30.0
14.2
7.2
5.3

2010
48.7
24.5
13.9
6.9
5.9

2005
45.2
12.9
18.8
14.5
8.7

2000
50.6
3.5
18.3
17.2
10.3

For more information about the automotive industry, please visit: www.autoalliance.org/

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SAFETY
From the 1970’s through 2014, fatalities on the road as a share of vehicle miles traveled (VMT)
fell dramatically. Viewed through the lens of a longer vantage point - the half century dating
from the passage of the National Traffic and Motor Vehicle Safety Act in 1966 through 2014 fatalities as a share of miles travelled are down about 80 percent. Yet far too many individuals
are losing their lives on our roadways (35,092 in 2015). As NHTSA notes, 94% of all crashes are
attributable to driver choices and human error, including impaired driving, lack of seat belt use,
speeding, and distraction. Vehicle defects are a factor in less than 1% of these fatalities and our
industry is working to reduce that number even more. A bright spot is the rapidly emerging
technologies that mitigate human error and help save lives by preventing crashes from
happening.
Still, and unfortunately, in 2015 fatalities rose 7.2%. It will take additional time for the
Department of Transportation and other stakeholders to determine why this occurred.
Increased VMT explains part of the rise, but that still leaves a significant part resulting from
other causes, including distraction on the part of both drivers and pedestrians and potentially
higher bicycle and motorcycle fatalities. Our preliminary look at the data suggests the vehicle
factor share is unchanged at under 1%.
ENVIRONMENTAL
Smog-forming pollutants have been virtually eliminated from passenger cars, down over 99%
since the 1960s. We are now complying with policies designed to mitigate the last 1% of these
pollutants. Meanwhile, cars are far more efficient than they were even a decade ago as
automakers down-weight and deploy new technologies to reduce carbon emissions. The
increases in fuel economy have occurred in recent years even as the combination of low gas
prices and higher conventional engine efficiency has resulted in declining market share of
alternative powertrain vehicles and, as noted, growing market share of light trucks versus cars.
Adjusted Fuel Economy
(MPG)
Hybrids
Hybrid %
Plug-in Hybrid
Plug-in Hybrid %
Electric
Electric %
Alt Total
Total
Percent All Volume

2005

2012

19.9
23.7
205,828
427,676
1.21%
2.96%
0
38,585
0.00%
0.27%
0
13,941
0.00%
0.10%
205,82
480,20
8
7
16,947,754 14,439,684
1.21%
3.33%

2013

2014

2015

24.3
498,054
3.21%
48,957
0.32%
47,595
0.31%
594,61
6
15,531,706
3.83%

24.3
452,507
2.75%
55,441
0.34%
64,772
0.39%
572,72
2
16,435,286
3.48%

24.7 (p)
378,402
2.18%
43,458
0.25%
70,823
0.41%
492,68
3
17,386,331
2.83%

Source: Wards Auto/ EPA Trends Report for Adjusted Fuel Economy

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INNOVATION
We are in the midst of an incredibly dynamic time in the history of our industry. Change and
disruption is rapid; new players are entering our sector; new business collaborations are being
established; and new models of mobility are emerging.
The future holds vast and diverse opportunities. We know there will be more ride sharing
entrants and programs and that the traditional models of vehicle ownership are evolving. We
know that new cars will take over more and more of the driving duties, ultimately achieving full
autonomy, but that a majority of the fleet will not be self-driving for more than a generation. We
know that technology, while not perfect, offers the promise of reducing crashes, injuries and
fatalities on American roadways. With wider deployment of crash avoidance technologies, we
will achieve a range of other social objectives including reduced fuel consumption, lower carbon
emissions and higher productivity rates. Autonomy is destined not only for automobiles but also
for large trucks and buses. And long term, autonomy will present far-reaching implications for
everything from urban land use to public transportation and infrastructure requirements.
Due to the rapid change that is occurring in the auto sector, our industry has proactively
established an Automotive Information Sharing and Analysis Center (Auto-ISAC) to facilitate the
exchange of important cyber threat information – and countermeasures – in real time. In
addition, the Alliance and our members established the consumer data Privacy Principles that
apply to the collection, use, and sharing of covered information in association with vehicle
technology and services available on cars and light trucks sold or leased to individual consumers
for personal use in the United States.
As current NHTSA Administrator Mark Rosekind often notes, the pace of technological change in
safety has far outstripped the pace of regulatory action. That’s not an indictment of the agency.
Rather, it is reflection of rapid global innovation, much of it in the U.S., fueled by marketplace
competition to achieve safety, social, environmental and other outcomes never before imagined.
The current Administration deserves credit for working to promote the adoption of semiautonomous and fully autonomous technologies. The Secretary and NHTSA Administrator both
understand that the benefits to society are so profound that it is vital to take an approach that
maximizes the deployment rate in order to maximize safety. And both recognize that the
traditional regulatory approach is less than ideal.

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RECOMMENDATIONS
As the Trump Administration prepares to take office in late January, we are pleased to offer the
following recommendations to consider as you develop your agenda, especially for the first 100
days.
I Harmonize and Adjust Fuel Economy and GHG Emission Standards:
The Corporate Average Fuel Economy (CAFE) and Greenhouse Gas (GHG) Emission Standards that
were adopted in 2012 by the EPA, NHTSA, and the California Air Resources Board (CARB) via a
Joint Final Rule pose a substantial challenge to the auto sector due to the steeper compliance
requirements for Model Years (MY) 2017-2025. As part of the Mid-Term Review process that
kicked off this summer with release of the Draft Technical Assessment Report (TAR), the EPA,
NHTSA, CARB and the auto sector are in the process of re-evaluating the assumptions that shaped
those original standards. Automakers have outlined concerns that call into question the viability
of the modeling used in the draft TAR. In short, we believe the TAR over-projects technology
efficiencies and inadequately accounts for consumer acceptance and marketplace realities.
These market factors are absolutely critical since automakers are ultimately judged by what
consumers take out of showrooms across America, rather than what automakers put into those
showrooms. The combination of low gas prices and the existing fuel efficiency gains from the
early years of the program is undercutting consumer willingness to buy the vehicles with more
expensive alternative powertrains that are necessary for the sector to comply with the more
stringent standards in out-years.
When the EPA, NHTSA and CARB established the 2012 Joint Final Rule creating “One National
Program,” one primary aspect was to “harmonize” the three sets of fuel economy regulations at
the federal and state level as fully as possible to provide greater consistency and certainty for
automakers as they develop their products for sale across the U.S. The Administration’s 2012
Regulatory Announcement highlighted the value of harmonization: “Continuing the National
Program ensures that auto manufacturers can build a single fleet of U.S. vehicles that satisfy
requirements of both federal programs as well as California’s program.”
But significant inconsistencies continue to exist.
Since 2012, it has become increasingly clear that many automakers may be in compliance with
the EPA program, yet subject to fines in the NHTSA program. This regulatory friction is already
occurring, driving up vehicle costs, and will become even more counterproductive as the
regulatory requirements become more stringent in future Model Years. Potentially billions of
dollars in fines under the NHTSA CAFE program are anticipated.
We recommend that the White House lead efforts with EPA, NHTSA, CARB and the automakers
on finding a pathway forward regarding the standards for 2022 MY and beyond prior to
publishing the NPRM and preliminary determination.

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We also recommend that the Trump Administration support the administrative and legislative
reforms necessary to achieve harmonization. This includes approving the petition that the
Auto Alliance filed with EPA and NHTSA on June 20, 2016 regarding certain harmonization gaps
that exist that can be addressed administratively.
II Include Zero Emission Vehicle (ZEV) Mandate Cost in Mid-Term Review:
Under a waiver granted by EPA, California’s ZEV requirement (followed by nine other states),
forces GHG-reducing solutions (heavy electrification) into the market rather than allowing the
“technology-agnostic” approach that EPA and NHTSA relied upon in the One National Program.
This additive ZEV requirement grows to over 15% of vehicle sales by 2025 in the ten states that
together account for roughly one-third of all light-duty vehicle sales in the United States. The
benefits of the ZEV program are factored into the Draft Technical Assessment Report, but the
costs of the ZEV program are ignored.
And while EPA argues that substantial electrification is not required for compliance with the
federal program, that point is academic if it is separately required for the ten relevant states.
We recommend that the cost of the ZEV mandate be factored into the Mid-Term Review due
to the much more expensive compliance pathway that will increase costs for consumers
nationally.
In addition, the 9 states that have adopted the California ZEV requirements have not provided
comparable and needed incentives for consumers to be willing to purchase the highly
electrified vehicles in their markets. This is leading to dramatically different consumer
acceptance of electrified products in the Northeast states compared to California. The
Administration should engage as appropriate to help address these ZEV issues – especially to
help avoid the creation of a patchwork of requirements that will frustrate the overall intent of
the “One National Program”.
III Regulatory and Organizational Reforms are Critical:
The number of government regulators (state and federal) who are interested in or currently
oversee the automobile sector (U.S. DOT, NHTSA, FCC, FTC, DHS, NTIA, U.S. Department of
Commerce, CFPB, EPA and California ARB) continues to grow. A robust examination of the
combined impact of such uncoordinated regulatory oversight on the auto industry and the
American consumer is warranted. As car prices rise, it becomes vital to look at the full cost of
regulatory initiatives. Well-meaning regulatory action risks increasing compliance costs to the
point that additional safety and fuel-efficiency technologies put new vehicles out of financial
reach of the average new car purchaser.

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To maximize affordability for all Americans, it therefore makes sense to assess a range of ideas
that can lead to even more thoughtful regulatory approaches, including:
•

Comprehensive Regulatory Review. Undertake a comprehensive review of all
regulations (final and proposed), interpretations of regulations, guidance, information
disseminations, information collections, that were promulgated or issued since
September 1, 2016 to ensure that these are consistent with the policy objectives of the
new administration.

•

Ensure that the EPA does not issue any Proposed Determination on whether the Model
Year 2022-2025 Greenhouse Gas Light Duty Vehicle standards are appropriate under
section 202(a) of the Clean Air Act.

•

Establish a New OMB Requirement for “Whole Car Cost Analysis.” To ensure that the
overall health and vitality of the auto sector is not jeopardized by the cumulative costs of
new vehicle regulations/policies, agency proposals for new car requirements should be
accompanied by a Whole Car Cost Impact Statement that aggregates compliance
expenses.

•

Impose a “Shot Clock” for Agency Responses to Industry Submissions/Petitions. To
encourage prompt responses to requests for regulatory actions, and prevent federal
agencies and departments from sitting on such waivers and petitions that may help spur
additional innovation, the timelines established in statute must be made meaningful and
binding.

•

Revise OMB Guidance for Federal Agencies and Departments. OMB ought to establish
clear thresholds regarding the use of non-regulatory guidance to ensure that quasiregulatory efforts do not circumvent the traditional rulemaking process.

•

Establish a Presidential Advisory Committee to Coordinate Auto Sector Regulators.
Such an advisory committee would help reduce regulatory friction and confusion among
federal agencies and departments and could potentially result in recommendations for a
new paradigm for vehicle regulation. The committee also could identify opportunities to
streamline and improve the efficiency of multiple federal and state agencies by
eliminating duplication of effort and more efficiently allocating responsibilities by agency
area of expertise.

IV Autonomous Vehicles:
We will be filing soon a detailed response to the recent Administration proposal regarding
autonomous vehicles. Our technical experts are busy at work evaluating that proposal and
formulating our reaction. We will share it with you upon its submission. But the test of policy at

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a conceptual level should be: how do we save the most lives by promoting the rapid deployment
of these technologies while also maximizing public safety and building public support for their
adoption?
SUMMARY
The future of mobility is bright and offers the long-term promise of great manufacturing jobs and
mobility that increases national productivity while generating significantly improved safety and
environmental outcomes. We live at a moment where technology and change are swamping the
regulatory capacity to manage our emerging reality. Reform is imperative.
The question at the end of the day is what kind of reform? There will be those who argue against
change and for a traditional regulatory paradigm that in effect slows down the march of
technology. And there may be those who argue that public policy should stay out of the way.
Neither of these choices is our view. We believe that to maximize consumer acceptance of new
mobility patterns and opportunities, the public and private sectors must work in a more
coordinated and cooperative fashion. It is in that spirit, and with a commitment to keeping cars
safe, clean and affordable for Americans, that we offer these recommendations and our pledge
to work with you to achieve the great social outcomes that are within grasp.