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Vehicle Scrappage Programme Suggested to Ease Burden

Vehicle Scrappage Programme Suggested to Ease Burden of Record Fuel Prices

Inequities caused by the new regional fuel levy will see some of the heaviest commercial road users avoid additional costs; while others who don't operate a vehicle at all will be paying even more towards roading projects, according to an industry expert.

Collision Repair Association general manager Neil Pritchard says the introduction of the regional fuel levy will result in unintended inequities in the market.

“Many of the estimated 12,000 taxis and ridesharing vehicles are now made up of hybrids and EV’s.

“These operators are among the region’s heaviest road users and will see a disproportionately lower increase in their overheads as fuel prices increase, while businesses which operate using petrol powered equipment such as arborists and the guy who mows your lawns are going to feel a lot more of the impact of an increase in fuel prices - costs that are going to be ultimately passed on to their customers.”

He says the region’s boat owners will also be impacted by the additional cost - despite not using the roads.

“Already a large proportion of the country’s estimated 1.4m recreation boaties contribute to the National Land Transport Fund (NLTF) - with 30 percent of their fuel costs absorbed in excise tax.

“Now with the introduction of a regional fuel levy, thousands of Auckland boat owners will pay even more towards roading projects - every time they head out on the water,” he says.

Pritchard says while record petrol prices and the introduction of the regional fuel levy may be part of the catalyst needed to help the Government meet its target of 64,000 EV registrations, more needs to be done to get older, inefficient vehicles off the road now to ease the price pressure on motorists.

Pritchard says high petrol prices being paid by motorists creates the ideal environment to introduce incentives to remove older vehicles from our roads.

“In isolation, an increase in the price of fuel may encourage car owners to look for more efficient vehicles, but with dozens of new electric and hybrid models expected to hit the market in the coming years, more needs to be done to encourage the earlier retirement of some of the less efficient, older models.

Pritchard says New Zealand should look to the example of other markets around the world which have successfully increased their EV ownership and reduced the average age of their passenger fleet at the same time.

He cites the example of Norway which is considered a model market for the incentivisation of EV ownership.

“Norway has a population size similar to our own however the number of registered EVs is more than 140,000 and their average age of passenger vehicles has declined to 10.5 years,” he says.

Pritchard says in contrast NZ has around 7,800 registered EVs and the average age of our light passenger fleet has increased from 14.0 years in 2012 to 14.4 years in 2016.

“There could be a number of factors contributing to the ageing of our fleet - it may be that vehicles are getting more reliable or that population increases have increased demand for low cost models - regardless of how efficient they are,

“At the same time, the average engine size in the NZ passenger fleet has decreased from 2218cc (in 2009) to 2204cc in 2016. Vehicles with smaller engines have fewer cylinders, and traditionally have less horsepower and torque. As a result, they burn less fuel.

“As an example, a small 2018 sedan may be around 18 percent more efficient than the same model which is 14 years older - that could mean a saving of $370 per annum for the average motorist - and significantly more for larger vehicle owners.

“What this is likely to mean is that as we reduce the age of our fleet, we will also reduce the average engine size and introduce more EVs onto the roads which helps improve the overall fuel efficiency of our fleet,” he says.

Pritchard says while Norway’s EV tax exemptions and other incentives such as access to bus lanes, encourages the purchase of new EVs over internal combustion engines, they have other strategies to help to get older models off the road.

“What we have at the moment is large numbers of older incredibly inefficient vehicles on our roads which is having an impact on public health and the environment.

“Often those driving these older models can least afford the cost of the fuel as it increases,

“The Norwegian model incentivises the purchase of new EVs but also helps create a trickle down effect - reducing the average age of all vehicles on their roads,” he says.

Pritchard says Norway introduced a vehicle scrappage programme which has also been used in countries to accelerate the replacement of older, inefficient vehicles - last year alone this scheme saw more than 136,000 cars permanently taken off Norwegian roads.

“A similar programme was trialled in NZ in 2007 and 2009 where car owners were offered two months free public transport - valued at around $400 in return for their older vehicles.

“A review of the Ministry of Transport trials found they were not cost effective due to the low number of vehicles received and the relatively low overall social and environmental benefits, relative to the costs,” he says.

Pritchard says since this time, the price of petrol has increased 35 percent from $1.91 to $2.58 (including the regional fuel tax), the average age of our fleet has increased by almost two years and is continuing to age - making it one of the oldest in the developed world.

He says similar overseas schemes in Europe, US and Asia provide a much larger cash incentive of up to several thousand dollars and have removed millions of inefficient vehicles from the roads as a result.

Pritchard says in addition to better fuel economy, new vehicle safety technology features have become mainstream in the past decade.

“Features like Electronic Stability Control (ESC), ABS braking, advanced airbags and high strength steel are all relatively recent developments that were not commonly available in New Zealand 15 years ago - so the faster we can phase out older vehicles, the safer our roads will be for all drivers,” he says.

Pritchard says the scrappage programme could be funded from the additional GST revenue received as petrol prices continue to increase.

-Ends-

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