JANUARY/FEBRUARY 1990 - VOLUME 11 - NUMBERS 1 AND 2
A U T O I N D U S T R Y
by Rosemary Dunlap
With the ardent Fervorof the newly converted, automakers are trumpeting the safety features of their cars. Two-page ads in major papers feature Lee Iacocca, once the leading opponent of air bags, extolling their virtues. 1990, with its sagging sales and cutthroat competition, is ushering in a new era--the era of the air bag.
After 15 years of delay, and tens of thousands of needless deaths, automakers--spurred by U.S. federal regulation and consumer demand--are finally equipping a wide range of passenger cars with air bags.
Of 15 million 1990 models expected to be sold in the United States, 3 million will include driver-side air bags. One million are domestically produced Chryslers, another million are Fords, 500,000 are GM cars and another 500,000 are built by foreign automakers or foreign-owned plants in the United States.
Terming air bags "the most important auto safety advance since the stop sign," Joan Caybrook, president of Public Citizen and former administrator of the National Highway Traffic Safety Administration (NHTSA), says, "Air bags are expected to prevent 12,000 fatalities and 150,000 disabling injuries each year."
Air bags offer vital protection to the majority (54 percent) of U.S. motorists, who, despite seat belt use laws, ride unbelted. They also greatly enhance safety even for those who buckle up. As Reagan administration Secretary of Transportation Elizabeth Dole noted in 1984, air bags "provide protection at higher speeds than safety belts do, and they will provide better protection against several kinds of extremely debilitating injuries (e.g., brain and facial injuries) than safety belts."
Automakers, however, are still not required to install air bags. The federal standard is a "performance standard," not an "equipment standard." As long as the protection is automatic (no action required by the front-seat occupants) and passes a 30 mph crash test, manufacturers may decide how to meet the standard.
Most new cars are equipped with automatic seat belts, and although there is a trend toward air bags, some automakers are withholding the safety technology. Seeking to accelerate the availability of air bags, consumer and injury prevention organizations, led by Motor Voters, a grass-roots consumer group founded in 1979, are urging consumers not to buy cars produced by companies which refuse to offer the safety devices. Groups endorsing the effort include the Center for Auto Safety, the U.S. Public Interest Research Group, the Connecticut Public Interest Research Group, the Virginia Citizens Consumer Council and the Massachusetts Head Injury Association.
Their first boycott target is Peugeot. While 17 rival auto companies geared up to offer air bags in the United States, Peugeot devoted its resources to capturing a larger segment of the European market. The privately owned, family-run business is the third largest automaker in Europe, and the eighth largest in the world. Peugeot is now the largest auto manufacturer selling cars in the United States without offering any air bag-equipped models.
To those familiar with the company's history, it comes as no surprise that Peugeot lags behind when it comes to safety. Protecting drivers and passengers has never been a priority for the manufacturer, critics charge. Dr. Antione Chapdelaine, an injury prevention expert at Enfant Jesus Hopital in Quebec City, Canada, observes that "Peugeot is behind not only in engineering. It is behind in philosophy."
The company regularly suggests that safety devices are far more expensive than their actual cost. As recently as 1987, Peugeot submitted a technical paper to an international conference on vehicle safety purporting to show that air bags are not cost- effective. The company began with the premise that full-front air bags would cost $2200, including the adaptation to the car; in high volume it claimed the cost would be $800. The company gave no basis for its estimates. In contrast, the U.S. Department of Transportation (DOT) estimated that "full front air bags need cost no more than $320" in volume production (over 300,000 units).
Peugeot's estimates of costs for automatic seat belts are also wildly inflated compared to those of other manufacturers and the DOT. GM estimated the automatic belts would cost $45; Chrysler put the price at $115. A NHTSA study of motorized belts showed they should cost $115. Peugeot's estimate was $380.
Perhaps the most resounding refutation of Peugeot's claim that air bags are not cost-effective comes from Cost of Injury: A Report to Congress, recently produced by the University of California, San Francisco and Johns Hopkins University for NHTSA and the Centers for Disease Control.
The authors found that, largely because motor vehicle trauma takes its greatest toll among the young, "the greatest economic losses [to American society] are caused by motor vehicles accounting for $49 billion" in human capital losses [the loss of productive output due to deaths and injuries]. The authors conclude that adding "full-front air bags in each [car] model would save about $4.7 billion in human capital terms or more than $19.5 billion by willingness to pay estimates [which take into account the monetary value people place on life]."
Ironically, DOT crash test results indicate that Peugeots provide dangerously inadequate protection in frontal crashes even when compared to competing models without air bags. The Peugeots, therefore, need air bags even more. In 1979, Peugeot registered the worst score in the entire 10-year crash test history. The driver-side dummy recorded an impact over four-and- one-half times the force likely to cause severe brain injury or death. Out of 10 Peugeot 35-mph-crash-test results, nine were disasters, with dummies in the front seats suffering impacts severe enough to kill humans. In 1988, and again in 1989, Peugeot registered the worst results in its class, and by far the worst results among all passenger cars tested.
Faced with these appalling results, rather than installing air bags, Peugeot opted for an automatic belt system in the 1988 Peugeot 505. The belt system affords little protection, however, since it detaches on impact. Consumer Reports noted in April 1989 that the "Peugeot 505 with automatic shoulder belts anchored to the window frame proved to be a disaster for both driver and passenger. The crash pulled the door frames forward markedly, destroying the anchor points of the belts. Neither occupant would have been likely to survive the crash."
Even when NHTSA re-tested the 1988 model at only 30 mph, with crash forces one-third less than at 35 mph, the belted driver-side dummy's head and face still struck the steering wheel with considerable force.
In many of its newly designed 405s, Peugeot installed an automatic motorized belt system which does not even meet minimum federal safety standards. Intermittently, the shoulder portion of the belt either does not move at all or sticks part way around the track. Last July, NHTSA granted a petition from Motor Voters and opened an "Engineering Analysis" [the investigation which pre-cedes a government-mandated recall] of the motorized belts in Peugeot 405s. As a result, the company is now recalling about 4,000 cars equipped with that belt system.
Peugeot remains vague about its air bag plans, saying only that "research and development is underway," and that "at some future point" the company "plans to have them in some models." The manufacturer says it has no "precise reason" for not having them yet.
Although company representatives deny that the consumer boycott has had any effect, Peugeot has launched a campaign to counter the groups' charges. The company has condemned the boycott and attempted to discredit organizers, terming them "irresponsible."
The key component of Peugeot's strategy is to discredit the NHTSA crash test data which the boycotters are using to support their efforts.
Through the revolving door which all too often connects government regulatory agencies and the entities they regulate, Peugeot has enlisted the aid of former NHTSA officials to challenge the validity of the crash test data. The company hired Ron De Fore, director of public affairs at NHTSA during the Reagan administration. De Fore, in turn, has called on former NHTSA Administrator Diane Steed and auto industry representatives to attack the government crash tests.
Steed told Automotive News that she would have abolished the crash test program, but feared the furor that would have created among consumer groups. Jack Gillis, a former NHTSA official, author of The Car Book and Motor Voters board member, disputes Steed's claim, however. "The Reagan administration didn't keep the crash test program because consumer advocates would object if it were scrapped," " he says. "They kept it because its very nature embodies the free marketplace spirit manufacturers don't have to 'pass' the tests, the information is simply released to the marketplace so that those buyers and sellers who are interested can use it." Gillis goes on to point out that "It's ironic that the Reagan officials who oversaw the program for eight of its 10 years are now attempting to earn a living in the private sector by trashing the very program for which they were responsible."
Peugeot acknowledges its low crash test ratings, but claims the tests are flawed and do not reflect the actual safety record of its cars. Peugeot Motors of America President Pascal Henault argues that "Peugeot's commitment to building cars that are safe in the real world cannot be overshadowed by these experimental crash test results. Our top concern is protecting human beings, not dummies." Peugeot spokesperson Kim Derderian criticizes the crash tests, saying that they "are not the proper way to measure safety" and "the slightest variable can alter results."
Jim Leahy, Executive Director of the Connecticut Public Interest Research Group and a boycott organizer, counters that "the crash tests are a better indication of auto safety than Peugeot's empty rhetoric."
While agreeing with Peugeot that crash tests should "not be used as the sole criterion of safety," boycotters maintain that the tests provide vital data for consumers. The crash tests are the leading measure of a vehicle's crashworthiness in frontal crashes. Clarence Ditlow, Executive Director of the Center for Auto Safety, says that "NHTSA uses the same test procedures for determining compliance with safety standards." He also notes that other manufacturers give more credence to the test results. For example, when Audi earned exemplary test results, it took out full page ads, crowing about its score. Auto writers also touted the results, and based on one score an Audi dealer proclaimed the Audi 100 to be the "safest car in the world." "Auto manufacturers can't have it both ways," says Ditlow. "The results are meaningful when Audi does well, and they are equally valid when Peugeot does poorly."
Boycotters agree that real-world crash situations differ from test conditions in one important respect. In government crash tests the dummies are always wearing taut seat belts. But in the real world, most motorists do not buckle up. In a frontal crash, Peugeot offers those people virtually no protection.
NHTSA itself underscores the importance of frontal crash protection, explaining that "each year about 22,000 people are killed in the front seat of passenger cars and another 300,000 suffer injuries serious enough to require hospital treatment. Frontal crashes account for half of all occupant fatalities and air bags are most effective in frontal crashes."
Former acting NHTSA Administrator Jeffrey Miller states that "An air bag used with a safety belt provides the best protection available in all kinds of crashes. It's a 'winning combination' that greatly increases your chance of surviving a crash that otherwise would have been fatal." Tragically, it is a "winning combination" not avail-able in any Peugeot.
Although in 1988 Peugeot promised boycotters it would produce data from its own tests to refute NHTSA's results, the company has yet to do so. Instead, it points to data from the Highway Loss Data Institute (HLDI), which it claims shows that their cars perform well "in the real world."
There are a number of flaws in this argument. First, HLDI ranks vehicles based on insurance injury claims records. Therefore, its report is affected by factors other than crashworthiness, such as driver behavior and the age and sex of its drivers. Second, HLDI figures are based on injury claims filed for previous years, and do not include the 1989-90 models, which are the target of the boycott. Third, Peugeot's ratings are slipping even on the HLDI scale. The company's cars used to rank "better than average" in HLDI. The last two HLDI reports (covering 1985-1988 model years) ranked Peugeot only "average," with a rating worse than more than 90 other models. It is expected that as more vehicles include air bags, Peugeot's relative ranking will continue to decline.
Finally, although Peugeot says HLDI is a better indication of real-world safety performance than the NHTSA crash tests, even the Insurance Institute for Highway Safety, which is closely affiliated with HLDI, describes NHTSA's crash test program as one "designed to provide measures of relative performance in real-world crashes within classes and sizes of vehicles" (emphasis added).
The NHTSA data are also uniquely valuable to consumers because they provide the only reliable means to rate cars' relative safety. Gillis states, "The bottom line is the U.S. Department of Transportation crash test pro-gram is the only way that consumers can compare the relative safety of the cars they are going to buy. Unlike insurance industry statistics, which are partially based on driver characteristics, the crash tests treat all cars equally."
Peugeot's Derderian says that Peugeot gets "innumerable" letters from Peugeot owners who say the "'car performed exceedingly well!" Yet the public record paints a far different picture. Among all cars sold in the United States, NHTSA receives the second highest percentage of safety-related complaints about Peugeot, ac-cording to Jack Gillis in the 1989 edition of The Used Car Book.
The boycott has received international coverage, and, judging by Peugeot's sales numbers, appears to be very effective. It was announced August 22, 1988, just as Peugeot was launching an unprecedented $50 million advertising campaign to introduce its new 405 model, named "European Car of the Year" and "Motoring Press Association Import Car of the Year." Peugeot Marketing Director Victor Dial projected sales would rise to 18,000 in 1989.
Instead, despite the company's media blitz including television spots, ads in upscale magazines and urban newspapers, offers of trips to Paris, dealer sales incentives and rebates Peugeot sales bombed. They fell 29 percent below 1987's level, with only 6,704 cars sold in 1988. In the first nine months of 1989, U.S. consumers bought only 4,762 new Peugeots, down from 1988 levels. Recently, Peugeot recalled all 8,200 of the 1989 and 1990 405 models sold in the United States because of a reported fuel storage problem which could result in the cars catching fire if they are rear-ended.
Although Peugeot denies any connection between the boycott and its sales plunge, the company concedes that it did not anticipate such difficulty. Jean Boillot, the head of Automobiles Peugeot, flew to the United States in June 1989 to investigate sales problems with the 405. He admitted to reporters, "We have got a problem with the 405 in the U.S. Our sales are currently 50 percent below a target which was modest in the first place."
Peugeot's Derderian insists that "there is no relation-ship at all" between the lack of air bags and low sales. She says the problem was that the company "introduced a car at the worst possible moment, [when the U.S. market was) on its way to a precipitous decline." However, boycotters note that during the same period, other makes, particulary Volvo aimed at the same market segment and including air bags in its cars enjoyed a substantial increase in sales.
Peugeot dealers evidently disagree with Derderian, aswell. Gary Reynolds, an exclusive Peugeot dealer in Lyme, Conn., recently told Automotive News that the Peugeot "dealer council has been pushing for air bags in at least some models."
Evidence is mounting that Peugeot has seriously underestimated both consumer support for air bags and the role crash tests play in purchasing decisions. Automakers' own surveys show overwhelming support for air bags. For example, in April 1989, the American Coalition for Traffic Safety (including Honda, Chrysler, Ford, GM, the National Automobile Dealers Association and the Motor Vehicle Manufacturers Association) released survey results which showed that 89 percent of U.S. drivers and passengers approve of air bags in automobiles.
A 1987 Purdue University study, funded by the American Automobile Association Foundation for Traffic Safety, found that when other factors are held constant, consumers are twice as likely to buy cars which perform well in government crash tests. NHTSA itself, in evaluating the success of its decade old crash test program, found that many vehicles with the poorest test results tended to have low sales volume, and to be phased out.
Peugeot has not been responsive. The company has "failed to see, as the manufacturers who are successfully selling cars in the United States have observed, that the American car buyer wants safety and is willing to pay for it," Gillis concludes. "Rather than correct the obvious safety shortcomings in their cars, they are attempting to discredit a [crash test] program that has stood the test of time, including exhaustive political, legislative and technical scrutiny."
Boycott organizers contemplate expanding the boycott to include the handful of other companies still not providing air bags, and Honda, which sells only its upscale Acura Legend with a driver-side air bag. According to Automotive News, Honda sold 783,102 new cars in the United States last year. Its newly designed Accord, now the nation's top selling car, has no air bags.
Expanding the boycott will be a difficult task, but the rising safety consciousness among the populace should facilitate the effort. As one consumer commented recently: "It's 1990. I can finally buy a car with an air bag. Why should I shell out $15,000 for a car that's already obsolete?"
Rosemary Dunlap is founder and President of Motor Voters in McLean, Virginia.