No “Third-Hand” Vehicle Market For Car Exports

Andrew Irwin is from the Micronesian Center for Sustainable Transport at the University of the South Pacific.
13 Jan 2021 16:14
No “Third-Hand” Vehicle Market For Car Exports
Vehicle carrier Grand Quest berth at Suva Harbour on December 29, 2020. Photo: Ronald Kumar.

In a series of discussions over the past week with partners across various sectors, a recurring theme has arisen – the monumental challenge of dealing with end-of-life vehicles and the current trend towards unyielding importation of second-hand vehicles from other markets.

The vehicle import market represents, by value, one of the largest trade activities currently engaged in by Fiji’s shipping sector.

In light of the duty reductions on the full range of motor vehicles that may be brought into the country, encouragement of continued expenditure on private automobiles is a clear consequence of the current budgetary and fiscal policy scenario. However, another clear consequence of the continually increasing registration of vehicles is the accrual of vehicles past their active, functional lifespan. The decommissioned/derelict vehicles resulting from the past decades of motor vehicle use have a pervasive presence throughout Fiji. Along with the vehicles imported, Fiji incurs the full breadth of end-of-life vehicle issues from the countries exporting vehicles (selling to consumers here before they are required to dispose of them).

As of the 2011 statistics – the previously reported figures on vehicle registration totals from Fiji Bureau of Statistics (FBOS) showing a massive disparity with the Land Transport Authority (LTA) registration figures from the same period before the two records were harmonised – it can be inferred at least 88,376 vehicles.

This appeared to be a consequence of the recording protocols, whereby LTA keeps only active registrations on the books, while FBOS was reporting cumulative figures through 2012. Given the vehicles brought in following this period (growth of over 40,000 vehicles in total annual registrations with LTA), the assumption over 100,000 derelict vehicles are present across the nation remains a conservative estimate.

This quantity of derelict vehicles raises a question of a massive logistical significance, both in terms of shipment and export requirements, and in terms of the land-based activities to transport and consolidate end-of-life vehicles in yet-to-be designated receiving areas for processing/dismantling.

Derelict vehicles

The reality of managing and resolving this steadily growing backlog of derelict vehicles raises the question of how this undertaking may be best structured. As it stands, no nationally endorsed or operated mechanism for disassembling, consolidating, and exporting scrapped vehicles currently exists.

While there are scrap metal traders and lead acid battery collectors, the recent influx of hybrid vehicles with lithium ion/nickel-cadmium (and other) battery sets has not yet been addressed with responsive policy, and it is a growing priority at a government planning level.

The opportunity for Government intervention to be accompanied by interested and willing private sector operators in the collection, dismantling, and export of scrap materials from recovered vehicles may be addressed through public-private partnerships or service contract/licensing arrangements.

The socio-economic losses associated with the absence of a national-scale system for vehicle disposal are coupled with the environmental threats posed by unregulated dumping of vehicles (without assurances waste oil and lubricants are properly removed and disposed of prior to abandonment.) Both the land degradation and opportunity cost of the area these vehicles occupy not being useable for other purposes should be considered, as well. Given the average size of vehicles (including cars, trucks, and buses), it’s expected nearly 60 hectares of land are currently being degraded/devalued by the legacy of derelict automobiles in Fiji. The opportunity for recovery of devalued land, rehabilitation of greenspace and otherwise usable land, and resource recovery potential (for steel recycling and other material processing). The emphasis on beautification and remediation of land to improve aesthetic value for locals and, upon resumption of travel when the COVID-19 pandemic is properly controlled, for expectant tourists bringing in additional revenue to the economy.

Third-hand vehicle market

There is no “third-hand” vehicle market, and given the propensity of consumers in the market towards bringing in second-hand vehicles, it is clearly demonstrated that a “free” market has not arrived at a solution for remediating the issue of abandoned vehicles.

Fiji may be poised to address this longstanding matter through a combination of policies geared towards strengthening regulatory measures around end-of-life vehicle management and penalties for improper disposal, alongside incentives for both industry and vehicle owners to keep motor vehicles integrated into the material resource supply chain, even when no longer roadworthy.

Both individuals and companies will be far less inclined to abandon vehicles if a system is in place, and appropriately publicised, to encourage turning over vehicles to a licensed operator (which may, ideally, dismantle and export components to countries of origin) in exchange for vehicle credit or monetary compensation of value commensurate with the socio-economic and environmental costs avoided by preventing dumping.

Benefits for industry, government (and the general population) would arise from resolving this longstanding supply chain challenge by working in collaboration.

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