The COVID-19 pandemic affected every industry. One such sector that has a big impact on the world economy is the automobile industry. This includes vehicle design, manufacture, marketing, sales and other operations. Even though it was already experiencing an unparalleled downturn, it had a completely bad year.
However, despite the challenges, it began to rebound and has been getting stronger. Thanks to the government, which has been putting programs in place. To shape its innovation and strengthen its growth, the government has influenced several policies. Before we talk about them, let’s understand their significance in shaping the automobile sector.
Significance of the Govt. Policies in Shaping the Automobile Sector
The automobile industry is significantly shaped by government rules. It guarantees that automobiles fulfill performance, safety and adhere to environmental requirements. As a result, it safeguards both consumers and pedestrians as well as the environment.
In addition to defining car standards, these policies also have an impact on innovation, technical advancement and automobile design. Simply put, it makes transportation safer and cleaner while also benefiting the planet.
Different Ways Government Policies Influence the Automobile Industry
Now that you know the importance of the government policies, let’s look into the different ways in which it has been changing the automobile industry:
1. Regulatory Policies
Regulatory policies are one of the main areas where government policies impact the automobile industry. Keeping environmental issues like air pollution and climate change in mind, governments everywhere have enforced strict laws.
These policies include automakers spending money manufacturing automobiles that adhere to strict emission regulations. These policies have resulted in significant improvements in automobile technology. Some of this includes the widespread use of cleaner fuels, hybrid and electric vehicles, the creation of emission control devices, etc.
2. Safety Policies
Another way government policies influence the automobile industry is vehicle safety. These standards are set by regulatory organisations for occupant protection and crash testing. Additionally, it also includes the incorporation of safety elements such as airbags, seat belts, anti-lock braking systems, electronic stability control, etc.
These policies are intended to lower the likelihood of collisions and lessen the degree of injuries. As a result, it saves lives and lowers the costs of traffic accidents to society. Therefore, automakers must invest in producing cars that adhere to these safety standards. This also leads to advancements in materials science, structural engineering, etc.
3. Trade Policies
Another government policy that impacts the automobile industry is trade policies. This relates to import/export laws, trade agreements and tariffs. Trade barriers also influence automakers’ competitiveness, supply chain tactics, etc. Trade agreements influence the movement of automobile goods and investment across international borders.
Tariffs also impact automakers’ pricing and profitability on imported automobiles or parts. As a result, this may force them to make strategic choices about sourcing tactics, supply chain resilience, etc. In the global automobile sector, these policies play a crucial role in strengthening ties between automakers, suppliers and customers.
4. Fuel Efficiency Policies
Another major area where government policies have an impact is fuel efficiency. This includes regulations that automakers attain a specific fuel economy level for all of their vehicles. Regulations also seek to lessen reliance on fossil fuels and encourage fuel-efficient devices.
As a result, automakers have emphasized creating lighter materials, hybrid powertrains, aerodynamic designs and electric propulsion systems. In addition to lowering greenhouse gas emissions, these policies also save consumers money on fuel throughout their cars’ lives.
5. Incentive Policies
Another government policy that is reshaping the automobile industry is providing incentives. It is offered to encourage the use of electric cars and other environmentally friendly mobility options. Some of these incentives include rebates, EV purchase subsidies, tax credits, investments in charging infrastructure, etc. Governments hope to lower pollution and lessen dependency on imported oil.
Additionally, it also promotes research in renewable energy technology, such as switching to electric and low-emission automobiles. Automakers are investing in battery technology and expanding their EVs, thanks to the rise in EV production and the availability of incentives. To encourage sustainable mobility and lessen traffic, governments are also looking into programs like ride-sharing, public transportation upgrades, carpooling, etc.
How Do These Policies Affect the Automobile Industry?
The policies implemented by the government in the automobile sector have brought several changes. From how the industry worked to how the future will look, it has been setting new standards and expectations. Talking about which, here is how it has affected the automobile sector:
1. Social Impact
Socially, these government policies have been encouraging more and more people to adopt electric vehicles. For instance, it has reduced the reliance on fossil fuels and greenhouse gas emissions. More and more people are adopting these and becoming a responsible community.
2. Economic Impact
Economically, these government policies have resulted in increased EV sales, thereby leading to more job opportunities. Households are enjoying lower electricity bills, thanks to battery storage systems. These policies have encouraged competition among manufacturers, thereby driving innovation.
3. Environmental Impact
In addition to increasing EV sales, these policies have also benefited the environment. Widespread adoption of these policies has resulted in a cleaner and greener environment. Moreover, the air pollution from EVs has also resulted in lowering the risk to public health.
4. Technological Impact
The increased sales of EVs have led to increased competition in the automobile industry. As a result, manufacturers are increasing their investment in EV infrastructure and advancing battery technologies. Additionally, it also facilitates the integration of renewable energy sources.
Smart Moves Towards a Better Future
From market dynamics to sustainability, the automobile industry is shifting for good, thanks to government policies. Be it regulatory standards or safety regulations, each policy has its unique impact. Beyond the automobile sector, these policies have also impacted the job market, technological advancements and more.
Therefore, automakers must invest in innovation, adjust to shifting rules and manage various regulatory standards while also matching their plans with sustainability. In the ever-changing automobile world, the government no doubt plays a crucial role in every aspect.
