Manufacturers Face Tougher Safety Tests for New Cars

Thursday, September 17th, 2009

Cited: The Wall Street Journal

It is going to be more difficult for vehicles to receive top grades on their respective safety tests thanks to the government and the Insurance Institute for Highway Safety (IIHS). As a safety-research arm of the insurance industry, IIHS says that 2010 vehicle models will have to be better to get its “top safety pick” award if it does not get a good rating on the new test of roof strength. The National Highway Traffic Safety Administration (NHTSA) is also creating a more vigorous crash testing system for 2011 models starting next year. This new safety rating system involves smashing vehicles in the polls and new overall safety rating scores.

The bottom line: Fewer vehicles are likely to get five-star ratings in the NHTSA’s one-to-five-star scoring system, and fewer vehicles are going to get the Insurance Institute’s top safety pick award, representatives of the NHTSA and IIHS say. In 2009, a record 84 vehicles earned the IIHS’s top endorsement.

This could be confusing for consumers, and present both engineering and communications challenges to car makers. Cars and trucks may get lower scores and fewer stamps of approval, but they won’t suddenly be less safe. Instead, the pressure will be on manufacturers to take vehicles to a higher level of safety.

Auto makers have done so well over the past two decades at figuring out how to engineer vehicles to pass safety tests that consumers now face the Lake Wobegon problem when they shop: All the cars are above average. So safety evaluators are raising the bar—the better to show consumers that there still are important differences in safety technology and engineering among the hundreds of models on the market.

Yet the Insurance Institute and the NHTSA are not instituting tougher tests in the same way or at the same pace, which could add to the challenges for consumers trying to plug safety scores into their new-vehicle buying decisions.

The IIHS’s latest focus is on roof strength. In its newest round of testing, released last week, the institute rated six mini-cars for their ability to withstand a test designed to simulate the roof-crushing impact of a rollover accident. The cars tested—the Chevy Aveo, Smart Fortwo, Honda Fit, Mini Cooper, Hyundai Accent and Toyota Yaris—are the kind of highly fuel-efficient cars the government’s just-concluded “cash for clunkers” program encouraged consumers to buy.

Tops in the small-car roof-crush test was the Smart Fortwo—a car the IIHS slammed in April when it was making a different point about how tiny cars fare poorly in head-on crashes with larger ones. But if a Fortwo flips on its roof, the Insurance Institute test predicts it will do a good job protecting the occupants, because it can withstand 5.4 times the car’s weight.

The worst performer was General Motors Co.’s Chevrolet Aveo, a Korean-made car that supported 3.09 times its own weight in the crush test—double the current federal standard. The Aveo’s score was also a touch better than the new federal standard of three times the vehicle weight that phases in starting in 2012.

“One test alone doesn’t determine whether a vehicle is safe,” says GM spokeswoman Janine Fruehan.

The IIHS doesn’t rely one test for its top safety pick awards, but it is making a point with its new roof-crush requirement. Its president, Adrian Lund, said in a statement that the government’s “leisurely phase-in of the new standard means roofs won’t have to get stronger right away, so we plan to continue rating vehicle roof strength for the foreseeable future. We want to reward manufacturers who are ahead of their competition when it comes to providing protection in rollover crashes.”

The government’s decision to phase in the new standard between 2012 and 2016 responds to pleas from the auto industry, which, besides being battered and bruised financially, always wants at least one product cycle to accomplish any regulatory change that involves the structure of a vehicle.

The same desire not to crush the industry with regulatory demands in the middle of a financial crisis led the NHTSA to delay until 2011 from 2010 the launch of its new more-rigorous crash tests. But the 2011 model year is right around the corner, given the lead time auto makers need to redesign vehicles and conduct their own testing.

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My Take: I like this little car! It is so cute! The Fortwo is a fantastic car for single people and it is economical. Of course, you have to give up the crowd when going to a party, but it is worth it. I now if they could just make a four seater that was just as economical they would really have a car that everyone would want. Well, almost everyone.

Since it is not a gas-guzzler, people will begin to travel more. This will improve tourism around the country and help the economy. The question is, how often will it break down? If the engine, transmission and framework constructed well, it should not break down very often. This can make a difference to a single person financially.

It is like choosing a doctor or dentist, once you find a dentist that you like; you do not want to change. Even if that dentist were a cosmetic dentist, you would not want to change as long as they gave you what you wanted.

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Home Rental Market Strong

Monday, January 19th, 2009

With the housing market in retreat, lower prices and a stalled lending sector making it more difficult than ever for would-be homebuyers to qualify for mortgages, the rental market for single family homes is stronger than ever.

Many property management companies, such as Wisconsin Property Management report a shortage of available rental properties in the metropolitan areas, where home depreciation rates of as much as 20% are driving a fierce home rental market, forcing those hoping to turn a profit on their investments to consider renting just to keep the bills paid until the market reverses and sales go up again.

The company’s Web site features a highlighted post sighting a need for more homes to accommodate their rising number of prospective tenants and a startling 2-3 week vacancy rate.

That rental housing vacancy rate mirrors the same vacancy rate that was dominating in the go-go days of the buying boom just before it busted in late 2003, when potential homebuyers across the country found themselves caught up in bidding wars and paying as much as twice the seller’s asking price just to get in on the market, in some cases, according to the National Association of Realtors.

The bright spot in this scenario is that the Wisconsin tenant placement process, and that of other rental companies across the state, are also moving more quickly for owners, as they find a significant number of would-be renters are coming to the market with the same good credit, income and verifiable references that they would otherwise be taking to the mortgage lender for approval on a home loan.

So, while the market retreats, homeowners can take some satisfaction in knowing that, if they can’t sell their home, they can very likely find a good tenant to live in it and keep the mortgage payments on schedule until the real estate sector comes back to life.

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