Table 101: option comparison and conclusion table — fitting of Advanced Brake systems -option 5

1.6. Impact Assessment of Anti-lock Brake System technology fitted on vehicles, manufactured and type approved by SMEs

1.6.1. Introduction

As part of the impact assessment of the proposed Regulation for the type approval of L-category vehicles, an analysis of possible effects on SMEs in the relevant business sectors must be conducted. In accordance with the definitions laid down in Recommendation 2003/361/EC, a medium sized enterprise employs between 50-249 workers. A small enterprise has 10-49 employees whereas micro enterprises employ up to nine persons. It is important to keep these distinctions in mind given that precise employment numbers in SMEs in the PTW industry are difficult to obtain, but recent data collected by EuroStat suggests that within the EU micro companies account for the biggest share of SMEs manufacturing cycles as well as motorcycles. Unfortunately the data for each type of manufacturer cannot be disaggregated. In addition this data should be referenced with caution owing to 2 constraints.

For the sake of clarity and completeness, it is important to point out that the data provided by EuroStat can only be used to gain a generic picture of the Cycle and L-category vehicle market since it lacks precision in two important ways. First, the data includes the manufacture of cycles which is problematic in the sense that the cycle market strongly varies from the PTWs market. The cycle market is very diversified and heterogeneous in terms of producers which often constitute of micro companies. This strongly contrasts with the motorcycle market which is far more concentrated. Second, the data does not specify the term ‘manufacturer’ which is paramount for the underlying assessment since the proposed Regulation will only cover OEMs that market their products complying with requirements for Whole Vehicle Type Approval (WVTA). Accordingly, all SMEs that might fall under the definition of manufacturer in the EuroStat database but which are only active in the business of vehicle modifications are not of primary concern in this impact assessment since their end products may be subject to national type approvals.

1.6.2. Regulatory Impacts on SMEs

In respect of the assessment of regulatory impacts on SMEs, there are some general points worth to be kept in mind. Hence, the introduction of new regulations can be a disproportionately bigger burden for SME manufacturers because of scarcer resources. Any additional costs caused by a new regulatory framework can have a substantial negative impact on the commercial viability of SME OEMs because of compliance costs and a lack of information or expertise which in many cases has to be bought from specialists outside the company. Furthermore, SME manufacturers have only a limited scope for benefiting from economies of scale and face severe constraints in passing on increases in costs to their customers because they generally act as price takers on the market. Moreover, especially in the context of the current crisis it is important to remember that the access to capital is restricted for SMEs which makes major investments difficult if often not impossible. On the other hand, SMEs are characterised by their high flexibility and their ability to adapt to new market conditions quickly. As such they are therefore quicker to meet new market demands than their larger counterparts. There may also be components and systems (hardware) and software required by manufacturers to be able to comply with new or revised legal requirements. This demand for certain niche products, not interesting to be mass produced by the major automotive suppliers, or highly specialised products or software solutions may be the high added value that specialised SME suppliers can provide.

1.6.3. Economic Advantages

There are a number of economic advantages in case of introduction of mandatory Anti-lock Brake Systems on PTWs. Hence, positive impact on society as a whole by fatality prevention and possible injury mitigation in road accidents of PTW riders positively correlate with the industry’s economic interests since it will retain first-line potential clients. Related to this is the increase in consumer confidence. This argument has essentially two aspects. First, on a more general level making the use of motorcycles safer will remove some of the safety concerns which are beneficial for acquiring new customers as well as for winning back old customers. Given some customers’ tendency to be up to date with the newest technological developments, the legislative proposal could have a positive impact on sale numbers since it encourages customers to upgrade their vehicle. Second, it will improve the individual brand image of motorcycle producers since they do not have an interest in being perceived as marketing second-class quality products. There is clearly no interest in being considered as lagging behind in terms of safety standards in an industry where safety issues play an increasingly greater role. Thus, due to the technological advancement brought by Anti-lock Brake System the product becomes more attractive. In addition, the attractiveness could also be raised by lower insurance premiums offered for PTWs with Anti-lock Brake Systems. With regard to new distribution channels, the downstream market that practically consists of SMEs could also profit from the measure envisaged. Hence, requiring the fitting of Anti-lock Brake System could encourage the emergence of a new niche distribution channel, e.g. outlets specialising in the safest motorbikes only.

1.6.4. Possible Disadvantages

As regards the disadvantages of the mandatory fitting of Anti-lock Brake System, it is obvious that there is a probability that the additional costs of fitting this braking system will be added up to the market price of the vehicle with an adverse effect on the vehicle’s competitiveness. However, it needs to be remembered that safer motorcycles could attract additional customers and, furthermore, economy of scales and market pressure may soon lead to a new equilibrium. In this context, it remains to be seen in how far SMEs manufacturing motorcycles in relatively low volumes will be able to cope with the competitive pressure to lower prices given that they do not profit from large economies of scale. In this context, however, it needs to be remembered that through an appropriate marketing strategy, SMEs could also have the possibility to get an extra margin on their products since new advancements in safety matters could justify higher prices. From the perspective of the Anti-lock Brake System supplier, it is worthwhile to state that in the short term the prices for Anti-lock Brake System systems could rise given the sudden increase in demand which could translate into higher vehicle prices.

1.6.5. Potential Opportunities

Despite the potential disadvantages, the mandatory fitting of Anti-lock Brake System also brings opportunities for SMEs. Alongside the advantages mentioned above, SME suppliers would have the chance to specialise in the production of Anti-lock Brake System braking systems since the demand for this system will significantly increase. In this context, there is even the possibility of the development of certain synergy effects between two SMEs where one focuses on the production of motorbikes whereas the other specialises on the supply of corresponding braking systems that are tailor-made for a specific brand. In this sense, both could profit from the conclusion of exclusive supply agreements and an improved brand image.

1.6.6. Potential Risks

In respect of potential risks of the compulsory fitting of Anti-lock Brake System, there is a danger that certain SMEs manufacturing PTWs will not have access to Anti-lock Brake System technology. There are two reasons for this observation. First, the R&D expenses for this technology are prohibitive and, thus, only the SME manufacturers producing high end PTWs may invest to develop the technology on its own. That is particularly true for SME manufacturers with low production volumes where economies of scale are very small. Second, in order to get the required technology, SME OEMs will have to rely on automotive technology suppliers and buy the technology from them. The problem with this scenario is that their purchase order might be too small and, hence, suppliers may refuse to deal with them since the profit margins are not high enough or the supplier may not even reach its break even point with these customised Anti-lock Brake System. In the worst case scenario a SME OEM might not find a supplier willing to supply Anti-lock Brake System technology which would basically amount to an inability to sell its products if the fitting of Anti-lock Brake System was to be made mandatory. With the purpose to address this problem, various solutions may be considered. One solution could be to set a sale number threshold for a product below which a SME producer does not have to comply with the Anti-lock Brake System requirement (small series requirements). Another possibility is to ensure that every SME manufacturer will get access to Anti-lock Brake System technology at an affordable price. In this regard, the idea of a voluntary commitment on the part of Anti-lock Brake System suppliers to supply SMEs could be another possibility to ease the fears expressed above.

2. Anti-tampering measures

2.1. No change;