Late in 2009, the Obama administration aggressively "pulled ahead" the Corporate Average Fuel Economy (CAFE) standards, bumping up the federal mandate from 2020 to 2016. By 2016, all new passenger cars must achieve an average of 39 mpg, with light trucks close behind required to meet the equally as strict 30 mpg standard.
Today's vehicles are complex and, because the design cycle to transform a vehicle from a concept on the drawing board to the showroom can take three to four years, auto makers are scrambling to come up with new designs that reduce vehicle weight and boost fuel economy.
One way to accomplish these savings is to replace some of the mild steel in a car's body with lighter — and more expensive — materials. I bet I have your full attention now after throwing "more expensive" out there. If it's more expensive to manufacture, it's going to be more expensive to repair. But how is such a massive transformation going to take place so quickly, and how will it eventually affect the bottom line?
Aluminum panels are a good option, but the cost of automotive-grade aluminum is roughly twice that of sheetmetal. You can bet the automakers will pass on a portion of that cost in collision replacement parts.
Carbon fiber is another very lightweight material that is ideal for automotive uses, but when damaged in a collision, it cracks and cannot be repaired. Carbon fiber is expensive to produce because the fibers have to be "knitted" together. The baking process also uses significant energy.
These changes could come quickly to bolt-on panels, but is the insurance world prepared? In today's insurance rating world, we really don't have the sophistication to account for these types of rapid technology changes. Most rate underwriting cost symbols are based on previous model history, but in today's rapidly changing vehicle architecture, is that a sufficient system to properly rate the insurance cost a new vehicle with these types of expensive panels?
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.