Product Responsibility in the Automobile Industry

The recent lawsuit in California intending to sue six major automobile companies for greenhouse gas emissions raises some interesting questions about product responsibility. While some may think it’s a bit of a stretch to hold companies accountable for how their product is used (e.g. McDonald’s obesity cases and the popular ‘gun manufacturer’ retort – are you going to prosecute arms companies for deaths caused by their products?), there is growing pressure for companies to ensure their products minimise harm to society and the environment. In addition to the McDonald’s cases, there has been pressure on video game companies to tone down the violence in their games, there have been campaigns against the alcohol industry to stop advertising to teenagers, and, in what might serve as a precedent for the current case, tobacco companies were sued by states in the 1990’s for contributing to public health costs.

So what can we expect to be the outcome if this case is successful? Ideally, we will see more fuel-efficient technologies applied to all types of vehicles so that consumers can purchase a style of car that meets their aesthetic needs but will also not cost too much more.

Waiting for market forces to create the economic conditions that would spur the large-scale development of more environmentally-friendly cars has proven to be ineffective so far. The technology has been around for years (in some form or another) and could have been produced earlier but there has not been sufficient demand. Companies may blame this on individual consumers but it is really up to the companies to generate demand through marketing. After all, how many useless products have companies managed to generate demand for where there was none?

At the same time, though, government has a responsibility to act when the market is egregiously failing to internalise social and environmental costs. Hence we have laws on minimum wage, pollution, etc. In this case, the state government should consider investing in public infrastructure. Having lived in five major cities in various countries, I can comfortably say that Los Angeles is by far the worst in terms of public transportation. Of course, one of the reasons for this is because in the 1930’s and 40’s General Motors bought up the streetcar lines in LA and other cities and dismantled them to boost sales of its automobiles.

Another way the government can take action is by setting legal limits on emissions and California has done just that, recently announcing an ambitious target to reduce greenhouse gas emissions 25% by 2020. It will be interesting to see how these moves, judicial and legislative, will affect the automotive industry. While each strategy may have its critics, at the very least, it should encourage more industry-wide solutions to climate change.

Sources:
‘California to cut gas emissions’, BBC NEWS, 09/27/06, http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/5387198.stm

‘California Sues 6 Automakers Over Global Warming’, Nick Bunkley, New York Times, 09/21/06, www.nytimes.com/2006/09/21/business/21auto.html