Financial Risks of Intelligent Vehicle Safety Systems - Economic View and Relevance for Market Introduction Decisions

Abstract

Intelligent Vehicle Safety Systems (IVSS) promise significant traffic safety improvements, which means from a societal point of view that resource savings can be realized and the allocative efficiency can be optimized. Therefore, transport policy has a high willingness to support and to ensure the market introduction of IVSS. The general proof of this optimality objective is normally done by cost-benefit analyses of IVSS. However, the resource saving potentials of IVSS are not a guarantee that the automobile industry will introduce IVSS, because the decisions to introduce highly complex safety technologies into markets depend on the financial risks, which might come up. Also the R&D departments of automobile industry are developing safety technologies; the management decision to introduce them might be unclear. That means the fact that the OEM faces financial risks could be a market barrier for the market introduction of IVSS. The objective of the paper is not to give a solution into that problem, but to structure the problem areas to get a deeper understanding of the situation of automobile industry.

Keywords: Financial Risk, Intelligent Vehicle Safety Systems, IVSS, Transport Policy, Accident Costs, Traffic Safety, Resource Savings, call-back campaigns, automobile industry, automotive industry, accident cost savings, vehicle safety technologies

JEL Classification: R4, O32, O3, R40, R41, R48, L91, L92, L98, D8