Addressing the used vehicles market: potential strategies for importing and exporting countries to improve safety, fuel economy and emissions impacts

A report of the Used Vehicles Working Group of the Partnership for Clean Fuels and Vehicles (PCFV)
25 Mar 2019

Most developing and transition countries do not have vehicle manufacturing capabilities hence rely on import of their entire vehicle fleet. A large percentage of these vehicles are imported as used or second-hand. The global demand for the export of used vehicles from developed countries to developing and transitional countries has grown significantly. The export of vehicles from developed countries is often spurred by stringent vehicle emission standards (along with mandatory motor vehicle inspections and registration/road tax) imposed by their governments. This often makes replacement of in-use vehicles with a newer fleet more attractive.
At the same time, and due to increasing income, used vehicles are offering consumers in developing and transitional countries convenient mobility at a lower cost. If properly regulated, used vehicles could also offer these countries relatively advanced vehicle emission reduction technologies that are already required in the exporting countries, presenting a win-win situation for both exporting and importing countries. These used vehicles can be much cleaner and more energy efficient than the existing vehicle stock. Vehicles that meet minimum emission standards in exporting markets, when combined with clean fuels and regular maintenance, have the potential to lower the impact of road transport in terms of CO2 and non-CO2 emissions in all markets. Regulation therefore is key to controlling the quality of used vehicle imports in line with the importing country’s aspirations.
Many developing and transition countries however lack standards to regulate used vehicle imports and where they exist, enforcement is poor. This leads to the use of partial regulations such as age limits which achieve some of the cleaner vehicles objectives, not all, unless implemented with other strategies. Overall, the more selective an importing country is in terms of used vehicle quality, the higher the level of emission control technologies of the imported fleet.
In real-world situations, however, used vehicle importers in developing countries operate in an environment where price is the main factor of consideration. As most importing countries lack the requisite regulations to control used vehicles imports, the bulk of vehicles imported into these countries are not in the best of condition. Many vehicles imported into these countries are compromised in terms safety/road worthiness, fuel economy and emissions. This situation is aggravated by the fact that most developing countries have not instituted cleaner fuels and vehicle emission standards, and lack mandatory vehicle inspection and maintenance programs.
There are currently no regional or global approaches that rationalize or govern the flow of used vehicles. Hence, there is no harmonized way to ensure that only quality vehicles are offered into the market. Both exporting and importing markets therefore have a role in the furtherance of the flow of quality used vehicles.
The Partnership for Clean Fuels and Vehicles has adopted a “Systems Approach” in its support to countries. The systems approach matches the fuel quality progression to the maximum feasible vehicle emission standards. There are various benefits to this approach. The main ones are: improved urban air quality through reduced vehicular emissions; potentially lower fuel consumption, improved road safety since these vehicles will be required to meet minimum road worthy specification; and net savings to the countries in terms of reduced imports of spare parts that would have otherwise been required to service an increasingly older fleet. Oil imports could also be potentially reduced.
This report is prepared by a Working Group of the Partnership for Clean Fuels and Vehicles and seeks to provide a menu of potential strategies that importing and exporting countries may use to regulate cleaner and safer used vehicles markets. The report also provides some country examples from both importing and exporting countries on used vehicles flows and various strategies being used by the countries to attract cleaner vehicles. The report concludes with a set of recommendations for importing and exporting countries on regulating used vehicles markets.