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Presentation by London Economics

Approval and market surveillance of two- or three-wheeled motorcycles – Impact assessment of IMCO compromise amendments. Presentation by London Economics. Overview. Introduction Enhanced functional safety requirements On-board diagnostic system (OBD) Timetable for emission standards

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Presentation by London Economics

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  1. Approval and market surveillance of two- or three-wheeled motorcycles – Impact assessment of IMCO compromise amendments Presentation by London Economics 28 Feb 2012

  2. Overview • Introduction • Enhanced functional safety requirements • On-board diagnostic system (OBD) • Timetable for emission standards • Discussion 28 Feb 2012

  3. Introduction 28 Feb 2012

  4. Background • This study is an impact assessment of amendments proposed by the IMCO Committee to measures contained in the European Commission's proposal for a "Regulation on the approval and market surveillance of two- or three-wheeled vehicles and quadricycles“ [COM(2010) 542 final, 4 October 2010] • The IMCO amendments examined in the impact assessment cover 3 areas: • Mandatory fitting of anti-lock braking system (ABS) • Mandatory fitting of On-Board Diagnostic (OBD) system • Expedited introduction of subsequent stages of Euro emission standards • The impact assessments build upon the comprehensive impact assessment on the Proposal compiled by the European Commission, but is narrower in focus: • The measures contained in the EC’s Proposal are taken as the baseline scenario • Only the impacts of differences between the EC’s original proposal and the IMCO Compromise are considered 28 Feb 2012

  5. Study approach • Review of the impact assessment on the EC’s original proposals [SEC(2010) 1152, 4 October 2010] and underlying documentation, in particular: • Robinson, T. L., McCarthy, M., Pitcher, M., Gibson, T. and Visvikis, C. (2009). Evaluating the impact of possible new measures concerning category L vehicles. Report to the European Commission, DG Enterprise and Industry. (‘TRL Report’) • Ntziachristos, L., Geivanidis, S., Samaras, Z., Xanthopoulos, A., Steven, H. and Bugsel, B. (2009). Study on possible new measures concerning motorcycle emissions. Final Report – Revised Version. (‘LAT Report’) • Consultations with stakeholders: • the association of the European motorcycle industry (ACEM) • individual motorcycle manufacturers and suppliers (Honda, Triumph, Bosch) • the Federation of European Motorcyclists Associations (FEMA) • the Association for Emissions Control by Catalyst (AECC) 28 Feb 2012

  6. Common assumptions I • A number of common assumptions are used throughout the impact assessment to ensure consistency of the quantitative estimate for the Net Present Value (NPV) of the different impacts: • discount rate of 4% (EC Impact Assessment Guidelines) • price inflation of 2% per year from 2012 (as in the TRL/LAT reports) • new registrations split 20:80 (constant) between new and existing types of vehicles (based on observations from manufacturers’/dealers’ websites and consultation with ACEM) • NPVs computed as of 2012 for the period up to 2021 • average per-vehicle motorcycles prices are based on observed prices of the 50 best-selling models (28% of the EU PTW market in 2011 ) 28 Feb 2012

  7. Common assumptions II • Growth in new registrations: • projected increases in registrations used for the EC impact assessment did not take into account the effect of the current economic crisis • updated estimates from EMISIA foresee a decrease in registrations up to 2013 • registrations never recover to current levels within the timeframe under consideration LAT Report (2009) Updated EMISIA estimates (2012) 28 Feb 2012

  8. Enhanced functional safety requirements 28 Feb 2012

  9. existing existing existing existing CBS/ABS ABS new new new new Summary of the proposed measureStatus quo (EC proposal) Mandatory ABS for new types in categories L3e-A2/A3 from 2017 Mandatory ABS and/or CBS for new types in category L3e-A1 from 2017 Proposed compromise L1e – A1 Commission proposal Proposed compromise L3e – A2/A3 2015 2020 2014 2016 2017 2018 2019 2021 Commission proposal 28 Feb 2012

  10. existing existing existing existing CBS/ABS ABS new new new new Summary of the proposed measureProposed changes I Introduction of ABS requirement for new types in categories A2/A3 one year earlier (2016) Proposed compromise L1e – A1 Commission proposal Proposed compromise L3e – A2/A3 2015 2020 2014 2016 2017 2018 2019 2021 Commission proposal 28 Feb 2012

  11. existing existing existing existing CBS/ABS ABS new new new new Summary of the proposed measureProposed changes II Introduction of ABS requirement for new types in categories A2/A3 one year earlier (2016) Extension of the ABS requirement to existing types in categories A2/A3 from 2017 Proposed compromise L1e – A1 Commission proposal Proposed compromise L3e – A2/A3 2015 2020 2014 2016 2017 2018 2019 2021 Commission proposal 28 Feb 2012

  12. existing existing existing existing CBS/ABS ABS new new new new Summary of the proposed measureProposed changes III Introduction of ABS requirement for new types in categories A2/A3 one year earlier (2016) Extension of the ABS requirement to existing types in categories A2/A3 from 2017 Introduction of equivalent ABS requirements for category A1 Proposed compromise L1e – A1 Commission proposal Proposed compromise L3e – A2/A3 2015 2020 2014 2016 2017 2018 2019 2021 Commission proposal 28 Feb 2012

  13. Main impacts • Main impacts were evaluated qualitatively based on existing evidence 28 Feb 2012

  14. Additional assumptions I • New registration forecasts for vehicles in categories A1 and A2/A3 are: • based on 2011 ACEM figures for new registrations of ‘motorcycles’ • projected up to 2021 using EMISIA growth forecasts • assuming a split of 30:70 between A1 and A2/A3 (as in the TRL report) • Cost of ABS/CBS: • based on observed price differences (2011) between models with/without ABS • assuming limited economies of scale • ABS: € 500 • CBS: € 250 • cost figures are disputed: • European Association of Automotive Suppliers (CLEPA): €100-€150 after mandatory introduction due to economies of scale • sensitivity tests show this affects the qualitative results only if ABS effectiveness is very high 28 Feb 2012

  15. Additional assumptions II • Effectiveness of ABS/CBS: • based on ‘estimated effectiveness of advanced braking systems for fatalities’ (‘best estimates’ from TRL report): • ABS: 18% • CBS: 8% • Deaths per 1,000 vehicles per vehicle category and braking system: • based on casualty figures and current use of advanced braking systems from the TRL report • assuming vehicles in categories A2 and A3 account of 80% of fatal accidents 28 Feb 2012

  16. Additional assumptions III • Cost of accidents: • based on TRL report • Three scenarios for the effect of ABS/CBS where fatality is avoided: • fatality mitigated to non-injury (best case) • fatality mitigated to slight injury • fatality mitigated to serious injury (worst case) 28 Feb 2012

  17. Results ICategories L3-A2/A3 • The net cost of the proposed measure is between €747 million and €1.1 billion, depending on the assumed effectiveness of ABS • 95% of the cost is due to the extension of the ABS requirement to existing types of vehicles in categories A2/A3 • The difference in fatality rates between vehicles with and without ABS results in 383 fatalities either avoided or mitigated due to the proposed measure over the period 2016-2021 • Under the most optimistic assumptions (all fatalities are avoided, resulting in costs of €1 million avoided in each case), the total costs avoided by the proposed measure are €380 million. 28 Feb 2012

  18. Results IICategory L3-A1 • The net cost of the proposed measure ranges from €610 million to €761 million, depending on the assumed effectiveness of ABS • 96% of the cost is due to the extension of the ABS requirement to existing types of vehicles from 2017 • Per vehicle, the cost of ABS represents on average 18% of the price of a motorcycle in category L3e-A1 • The difference in fatality rates between vehicles with and without ABS results in 155 fatalities either avoided or mitigated due to the proposed measure over the period 2016-2021 • Under the most optimistic assumptions (all fatalities are avoided, resulting in costs of €1 million avoided in each case), the total costs avoided by the proposed measure are €153 million 28 Feb 2012

  19. On-board diagnostic (OBD) system 28 Feb 2012

  20. Summary of the proposed measureStatus quo (EC proposal) OBD II OBD I Only measures for categories L1B and L3 are analysed New motorcycles and mopeds have to be equipped with OBD I from 2017 New motorcycles and mopeds have to be equipped with OBD II from 2021 existing Proposed compromise new L1Be existing Commission proposal new existing Proposed compromise new L3e existing Commission proposal new 2022 (t+8) 2020 (t+6) 2021 (t+7) 2017 (t+3) 2018 (t+4) 2019 (t+5) 2016 (t+2) 28 Feb 2012

  21. Summary of the proposed measureProposed changes I OBD II OBD I For new vehicle types in category L3e, the requirement for OBD I and OBD II will apply one year earlier: 2016 (OBD I) and 2020 (OBD II) existing Proposed compromise new L1Be existing Commission proposal new existing Proposed compromise new L3e existing Commission proposal new 2022 (t+8) 2020 (t+6) 2021 (t+7) 2017 (t+3) 2018 (t+4) 2019 (t+5) 2016 (t+2) 28 Feb 2012

  22. Summary of the proposed measure Proposed changes II OBD II OBD I For new vehicle types in category L3e, the requirement for OBD I and OBD II will apply one year earlier: 2016 (OBD I) and 2020 (OBD II) For existing vehicle types in category L3e, the requirement for OBD I will apply from 2017 and for OBD II from 2021 existing Proposed compromise new L1Be existing Commission proposal new existing Proposed compromise new L3e existing Commission proposal new 2022 (t+8) 2020 (t+6) 2021 (t+7) 2017 (t+3) 2018 (t+4) 2019 (t+5) 2016 (t+2) 28 Feb 2012

  23. Summary of the proposed measure Proposed changes III OBD II OBD I For new vehicle types in category L3e, the requirement for OBD I and OBD II will apply one year earlier: 2016 (OBD I) and 2020 (OBD II) For existing vehicle types in category L3e, the requirement for OBD I will apply from 2017 and for OBD II from 2021 OBD II will not be required for vehicles in category L1Be Existing types of vehicles in category L1Be have to be fitted with OBD I from 2018 existing Proposed compromise new L1Be existing Commission proposal new existing Proposed compromise new L3e existing Commission proposal new 2022 (t+8) 2020 (t+6) 2021 (t+7) 2017 (t+3) 2018 (t+4) 2019 (t+5) 2016 (t+2) 28 Feb 2012

  24. Main impacts • Main impacts were evaluated qualitatively based on existing evidence 28 Feb 2012

  25. Additional assumptions • Cost of OBD 1: €11 per vehicle • based on report for UK Department of Transport (2003) • Cost of OBD II: €46 per vehicle • based on industry consultation: price up to €92 • potential cost including oxygen sensors up to €100 28 Feb 2012

  26. Results • The proposed measure results in additional net costs of €130 million (NPV) • The main driver of the cost differential is the expansion of the OBD requirement to existing types of vehicles • the extension of the requirement to fit OBD I to new types of motorcycles (category L3e) from 2016 results in additional costs of around €2.4 million • the extension of the requirement to fit OBD I to existing types of motorcycles from 2017 results in additional costs of around €10.7 million per year • the extension of the requirement to fit OBD II to new types from 2020 and existing types from 2021 results in additional costs of €12 million and €48 million, respectively • the extension of the requirement to fit OBD I to existing types of mopeds (category L1Be) from 2018 results in additional costs of around €6.6 million per year • the removal of the requirement fit OBD II to new types of mopeds (category L1Be) results in savings of around €7 million • The environmental benefits have not been quantified, but are considered small 28 Feb 2012

  27. Timetable for emission standards 28 Feb 2012

  28. existing existing Euro 4 Euro 5 Euro 3 new new Summary of the proposed measureStatus quo (EC proposal) Euro 3 for new types from 2014 and for existing types from 2015 Euro 4 for new types from 2017 and for existing types from 2018 Euro 5 for new types from 2020 and for existing types from 2021 Proposed compromise L2e-L7e Commission proposal 2019 2020 2017 2016 2015 2014 2021 2018 28 Feb 2012

  29. existing existing Euro 4 Euro 5 Euro 3 new new Summary of the proposed measureProposed changes I Removal of the Euro 3 step Proposed compromise L2e-L7e Commission proposal 2019 2020 2017 2016 2015 2014 2021 2018 28 Feb 2012

  30. existing existing Euro 4 Euro 5 Euro 3 new new Summary of the proposed measureProposed changes II Removal of the Euro 3 step Expedited introduction of Euro 4: 2016 for new types and 2017 for existing types Proposed compromise L2e-L7e Commission proposal 2019 2020 2017 2016 2015 2014 2021 2018 28 Feb 2012

  31. Main impacts • Main impacts were evaluated qualitatively based on existing evidence • Overall impacts appear in terms of costs and environmental benefits appear limited • The impact on the competitiveness of European motorcycle manufacturers could be substantial, but is difficult to predict and to quantify 28 Feb 2012

  32. Additional assumptions • Cost of Euro 4: €40-€70 + engine tuning/calibration costs, which apply per engine family • based on TRL report scenario 3 (Euro 4 in the EC proposal) • potential costs of IMCO requirements for Euro 4 could be higher (LAT scenario 4, with costs of €135-€225 + calibration costs per engine family) 28 Feb 2012

  33. Current emissions performance of L-category vehicles • Compliance with Euro 3 and Euro 4 standards is already relatively widespread (~25%), especially for A2/A3 vehicles (based on type approval data from DE) • However, this does not take into account the durability requirement Emission performance by vehicle type % of compliant types (A2/A3) by year of approval 28 Feb 2012

  34. Results • The proposed measure results in additional costs of €16 million, assuming an average cost of Euro 4 of €50 • Manufacturers argue the cost could be 4x as high (akin to LAT scenario 4) • The environmental benefits have not been quantified, but are considered small 28 Feb 2012

  35. Moritz Godel mgodel@londecon.co.uk, +44 (0)20 7866 8179 28 Feb 2012

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