Automotive Manufacturer Risk Analysis: Meeting the Automotive Fuel Economy Standards

Bradley, Stephen P.; Karnani, Aneel G.; HH Aerospace Design Company

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Automotive Manufacturer Risk Analysis: Meeting the Automotive Fuel Economy Standards

1979-08-01
By Bradley, Stephen P. ; Karnani, Aneel G.

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English

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Creators:

Bradley, Stephen P. ; Karnani, Aneel G.

Bradley, Stephen P. ; Karnani, Aneel G. Less -
Corporate Creators:

HH Aerospace Design Company
Corporate Contributors:

John A. Volpe National Transportation Systems Center (U.S.) ; United States. Department of Transportation. National Highway Traffic Safety Administration

John A. Volpe National Transportation Systems Center (U.S.) ; United States. Department of Transportation. National Highway Traffic Safety Administration Less -
Subject/TRT Terms:

[+]

Automobile Industry Automobiles Fuel Consumption Fuel Economy Standards Motor Vehicle Industry Risk Analysis Standards
Publication/ Report Number:

DOT-TSC-NHTSA-79-24 ; DOT-HS-803 763

DOT-TSC-NHTSA-79-24 ; DOT-HS-803 763 Less -
Resource Type:

Tech Report
Geographical Coverage:

United States
Corporate Publisher:

United States. Department of Transportation. National Highway Traffic Safety Administration
Abstract:

An overview of the methodology and some findings are presented of a study which assessed the impact of the automotive fuel economy standards (AFES) on the four major U.S. automakers. A risk model was used to estimate the financial performance of the manufacturers, given assumptions about their strategy for meeting the AFES and the resolution of exogenous (i.e. economic and marketing) and endogenous (i.e. technological and manufacturing) uncertainties. Within a nominal scenario (i.e. all but fuel economy-related data set at nominal values), four cases were examined: nominal (in this case, fuel economy data set at nominal), optimistic (fuel economy gains higher, costs lower than estimated by Department of Transportation (DOT)), pessimistic (vice versa), and probabilistic (fuel economy variables distributed according to a truncated normal distribution). The risk due to technological and manufacturing uncertainties was assessed. The capital expenditure estimates from a recent DOT report were compared with nominal model output. Three additional scenarios were examined, assuming nominal values for fuel economy-related variables: ideal (downsizing and material substitution on a more voluntary basis, without strict AFES); foreign penetration of mid-size car market, and economic risk (three different demand changes in U.S. market). It was found that the risk due to uncertainty in manufacturability is higher than that due to technological uncertainty, and that the decrease in variable manufacturing cost due to downsizing is more than enough to offset the corresponding increased capital costs.
Format:

PDF
Funding:

DOT-TSC-657
Collection(s):

Volpe Center
Main Document Checksum:

[+]

urn:sha256:fe949bd8eee32fdb61d9e2f5a0c2490c00c95a33e57ef4b84634f84e8cf45ab3
Download URL:

https://rosap.ntl.bts.gov/view/dot/10527/dot_10527_DS1.pdf
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Automotive Manufacturer Risk Analysis: Meeting the Automotive Fuel Economy Standards

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