SEMA eNews Vol. 15, No. 37, September 13, 2012

Reoccurring Legislative and Regulatory Trends Affecting Your Business

SEMA News—August


Greg Dooley

Some Legislative Proposals Follow
Predictable Patterns



Aftermarket Parts Laws, Aftermarket Parts Regulation, Auto Legislation, Federal Regulation Aftermarket Parts
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.




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

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

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

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