Senator RIBICOFF. Yes, but during these discussions, do not the representatives of the automobile industry say, look, you are asking for standard. The cost would be prohibitive. It would price us out of the market. During these discussions of all these standards, do not they get into the question of price and what this would cost and raising the overall price of the car to the consumer? You mean nothing is ever discussed about price when you sit down with the automobile industry?

Mr. BRIDWELL. As I said earlier, Senator, to the best of my knowledge, in the manufacturer's comments on the standards issued earlier last year and which were mandatory for implementation on January 1 of this year, price was not a factor, and was not discussed.

Senator RIBICOFF. In other words, the price of these standards really did not bother you nor did it bother the manufacturers?

PROHIBITIVE PRICE INCREASES NOT DISCUSSED

Mr. BRIDWELL. I would qualify that only to the extent that they did, and we had lengthy discussions on leadtime, and, of course, leadtime has-there is a cost or a price implication in any leadtime discussion, but in the sense of your question, did they say to us this would result in an exorbitant price increase, the answer is "No, they did not." Senator RIBICOFF. Not exorbitant, but they never discussed any price increase with you, did they?

Mr. BRIDWELL. Not in those terms, no, sir.

INDEPENDENT BASIS FOR PRICE JUSTIFICATIONS UNAVAILABLE

Senator RIBICOFF. Well, were you surprised yourself with the additional price added to the automobile on the 1968 model?

Mr. BRIDWELL. No, I was not surprised.

Senator RIBICOFF. You were not surprised?

Mr. BRIDWELL. No, sir.

Senator RIBICOFF. You thought this was a justified price increase? Mr. BRIDWELL. No, sir. I said I was not surprised.

Senator RIBICOFF. You were not surprised. Do you think it was justified?

Mr. BRIDWELL. Again, I have to comment that I have no information on which to make an independent evaluation and judgment as to the justification for what the auto manufacturers said was the safety portion of the price increase they announced.

REASONABLE PRICES FOR SAFETY EQUIPMENT EXPECTED

Senator RIBICOFF. Do you think that since automobile safety is so important for the lives and health and well-being of the millions of Americans who ride in automobiles that the price of safety should be a factor taken into account?

Mr. BRIDWELL. There is no question in my mind that some safety standards which we have promulgated and which are yet to be promulgated will have a cost and, therefore, a price consequence both to the manufacturer and to the consumer. And, our chore is to develop safety

standards that will reduce, minimize deaths, injuries, and the opportunities for that kind of human suffering, within reasonable economic

terms.

Senator RIBICOFF. I am somewhat puzzled here, Mr. Bridwell. Reading on page 2 of Senator Mondale's testimony, the first paragraphMr. BRIDWELL. Sir, I do not have a copy of that. May I get one?

SUBSTANTIAL PRICE INCREASES NOT JUSTIFIED

Senator RIBICOFF. "In answer to an inquiry, the Federal Highway Administrator, Lowell K. Bridwell, wrote me on May 23, 1967, that any substantial price increase based on compliance with the initial Federal Motor Vehicle Safety Standards is not justified."

Mr. BRIDWELL. Yes, sir. I did write such a letter.

Senator RIBICOFF. Well, do you want to change your answer at all concerning the justification of the substantial price increase?

Mr. BRIDWELL. No, sir. On the basis of the information that was before us at the time that the standards were promulgated and continuing up to this point in time, I still have no information before me which would lead me to change what I wrote.

Senator RIBICOFF. In other words, you are still of the opinion that the price increase is not justified?

Mr. BRIDWELL. I think the key to that is how do you define the word substantial.

Senator RIBICOFF. Well, would you say

Mr. BRIDWELL. And, I do not attempt to say that no increase was justified. So, trying to set a specific dollar number on substantial price increase, I cannot do it.

AGGREGATE INCREASE $125

Senator RIBICOFF. Well, I mean, I am just taking Senator Mondale's figures that he testified to, that he said that this was the highest increase, I believe his testimony was, in 20 years, and that came to something like $125. The implication was that this increase was due to safety standards. Now, will you want to comment on that?

Mr. BRIDWELL. Only to this extent, Senator, that that was the aggregate increase and I believe the manufacturers stated it was based on safety standards, labor costs, material costs and other factors, and to the best of my knowledge they did not break out what portion of it was due to a safety standard with the exception of the shoulder harness and the only information that we have that would assign any specific number is the number that Senator Mondale quoted from the Bureau of Labor Statistics.

COST VERSUS PRICE OF SHOULDER HARNESS

Senator RIBICOFF. What are they charging for the shoulder harness? Mr. BRIDWELL. They stated that the price they were attaching to the shoulder harness ranged by manufacturer from $23 to $32.

Senator RIBICOFF. $23 to $32. I believe Senator Mondale said thatAn American company which manufactures shoulder harnesses for the original equipment market informed us that it sells shoulder harnesses to be used in conjunction with existing lap belts to one of the big four domestic manufacturers

for $1.25 to $1.50 each, and a major European automobile producer informed us that he obtains the harnesses, fittings and anchorages for combination lapshoulder-seat belts at a price of $2.50 each.

Now, do you see any justification, giving the furthest stretch to your imagination of what industry is entitled to, that there is any justification of a mark-up from a $1.25 to a $1.50 to $23, to $24?

Mr. BRIDWELL. I have no specific information upon which I can make an evaluation of whether that is or is not a justifiable increase. Senator RIBICOFF. Well, let us say you went to the market place or you went into any store. Would you feel that you were being bilked if you knew you were paying $24 for something that cost the manufacturer a dollar and a quarter?

THREE FACTORS TO CONSIDER IN PRICE EVALUATION

Mr. BRIDWELL. Let me-I am not trying to duck the question and I will answer, but I think there is an appropriate part of that answer that has to come first and that is at the time we promulgated this standard, Senator, back in January last year, we knew the optional equipment price, that is, shoulder harness optional equipment, and we evaluated that price against three known factors. One, that almost certainly there had to be economies of scale. In other words, instead of just optional equipment, if it were standard on all makes and models, that there almost certainly would be economies of scale. Offsetting that is that the optional shoulder harnesses may or may not have met the performance criteria which we promulgated. There may well have been cases where the manufacturers had to strengthen roof structure, floor structure, and the harness and its fittings, in order to meet the performance criteria.

The third factor was that as optional equipment, we understand that there is a different markup to dealers than if it is an item of standard equipment. So with that very long preface, the answer to your specific question, if I were in the role of a consumer going to an auto dealer, I would think that $23 to $32 for that item is too much.

EXCESSIVE MARKUPS UNJUSTIFIED IN LIGHT OF SAFETY NEEDS

Senator RIBICOFF. Well, in other words, you are charged with promulgating safety standards for automobiles. Do you consider any justification for the automobile manufacturers to profiteer excessively in the safety standards that you promulgate? I do not want to sit in judgment here as to what an automobile manufacturer or any manufacturer should make. But here we are talking about safety. We are talking about saving people's lives. How can any legitimate manufacturer on a legitimate return justify charging the consumer $24 on an item that cost him a dollar and a quarter?

Mr. BRIDWELL. I would assume that he could not, given the accuracy of the cost figure to him and the selling price and assuming that no other unstated factor has been introduced into the equation.

Senator RIBICOFF. Well, what bothers me, if you started to multiply safety standards to that extent, you would basically undermine the entire legislative requirement for safety standards. It would become

very obvious, if you started to multiply a dollar and a quarter item by $24 and do it over 24 standards, that you hold all the safety features of the automobile up to ridicule and build up a backfire in the public mind so they would rather take the chance of getting killed or severely injured and play Russian roulette on the highway rather than pay the higher prices.

Mr. BRIDWELL. I wholly subscribe to your statement, Senator, and the offsetting factor which I believe the Congress took into account and debated pretty thoroughly was the competitive forces of the market.

EXPERIMENTAL MODEL CAR SUGGESTED

Senator RIBICOFF. A question that Senator Kennedy has submitted, was going to ask you, and asked me to ask, and this is the statement: I think it is clear that a method of getting a cost yardstick is required. Would not a prototype safety car be a fully effective method? If the Government built it. got the equipment, constructed it, learned the labor input, we could calculate it pretty closely, could we not? Then, why has not your Department fulfilled the Congressional mandate of beginning research with an experimental car under Section 106(a) of the National Traffic Safety Act? The New York State car is already underway. You would save millions in preliminary work by using it and they need funds. Why cannot you finally endorse using that car both as a technological and cost yardstick?

Mr. BRIDWELL. I believe, Senator, there are two questions embodied in that question. The first question is that the development of a safety car would be of some assistance. I do not believe that I would be tempted to believe that that would answer the question for comparative prices because we promulgate standards in terms of performance criteria which intentionally leaves open maximum flexibility and innovative opportunity for varying designs which can meet that performance criteria. Therefore, the mere development of a safety car, worthwhile though it is, will not do any more than give us some information on the question of price comparability.

On the second part of the question, we have issued requests for proposals for the design, the engineering design of a safety car. We have received responses to those proposals and they have gone through and are just about finished with a very detailed analysis of the proposals. So that we will be making a decision very soon.

Now, as to the New York State safety car project as such, I think it is fairly important to note that New York State itself-that is, as a unit of State government-is not building a safety car or designing a safety car. Rather, it by contract, is hiring a private organization to do this work for them. That private organization is one of the companies which responded to our request for proposals. Senator RIBICOFF. Senator Hansen?

Senator HANSEN. Thank you, Mr. Chairman.

COMPETITIVE LEVEL IN AUTO INDUSTRY

Mr. Bridwell, I refer to the Statistical Abstract of the United States for 1967. I note on page 351 of that document evidence that in my judgment shows the competition actively at work in the automobile industry seems to be doing a fairly good job. Comparing wholesale price indexes by commodities from the years 1950 to 1966, using the

years 1957 through 1959 as a base or as 100, I note that the wholesale price in 1966 of iron and steel was 102.3; machinery and automotive products, 106; agricultural machinery and equipment was 118.5; manufactured animal feeds, 126.6; and motor vehicles on the basis of prices between the years 1957 and 1959, 100.8.

In your judgment, would this give some credence to my belief that the automobile industry with the competitive forces at work has done a fairly good job in keeping prices in line?

Mr. BRIDWELL. I believe that there is intense competition in the automobile industry, Senator Hansen. I believe that the figures you quote and I can be corrected on this because I am not that familiar with them-result from an analytical process in which the actual price is related to an evaluation of quality, so that is not a reflection of the price increase but is an index of price measured against change in product.

PRICE INCREASES WILL PROBABLY NOT DETER BUYING

Senator HANSEN. Speaking before the Society of Automotive Engineering Congress Exposition earlier this past month, Alan S. Boyd is reported in the Automotive News, issue of January 15, 1968, to have said essentially:

The prices applied to U.S. cars when shoulder belts became standard equipment is not great enough to prohibit the public from buying cars.

Do you subscribe to this statement?

Mr. BRIDWELL. Yes, sir. I think that the price increase that was announced is not going to prevent people from buying cars.

Senator HANSEN. You do not feel then, that the price rises which are reflected in new cars, because of the additional safety equipment, will result in any significant diminution of interest on the part of potential buyers?

Mr. BRIDWELL. I really am not qualified to answer that question, Senator, because I do not think that I know enough about the automobile industry and its sales fluctuations to be able to evaluate the relative difference in sales which would or would not occur because of the safety features.

Senator HANSEN. On page 4 of your statement you say:

We are establishing within the Bureau's Motor Vehicle Performance Service an Office of Product Cost and Lead-Time Analysis to carry out these functions. This office will determine whether proposed standards are reasonable, practicable and appropriate for the particular type of motor vehicle or [item or] type or item of equipment for which they are prescribed. The office will evaluate cost, feasibility and lead-time as required for the development, establishment and enforcement of vehicle safety standards.

My question is: Would the Bureau respect the confidential nature of information which may be gotten from the industry?

Mr. BRIDWELL. We are required by statute, Senator, to respect confidential information obtained from the industry.

Senator HANSEN. Then, may I next ask, does not what your Office propose to do, as I have just read here in this statement, do away with the need for this bill?

Mr. BRIDWELL. I am not sure that I can answer the question as stated, but let me answer it in a different way, if I may, Senator. Our purpose in establishing this Office is so that we can have the resources