Disposal: what to do with old cars?
From January to September, more than 400,000 used vehicles were imported, and only 774 were exported. In most cases, Ukraine is the end point of life of imported vehicles. What happens to used cars? Who has the right to recycle cars today and do they really do it? What to do with cars left in the yards and is it possible to introduce a tax on old cars in Ukraine? Experts from the Institute of Car Market Research analyzed what is happening in the field of vehicle recycling.
What is the average age of the Ukrainian fleet?
From January to September 2021, 1.57 million transactions with vehicles of all types were recorded in Ukraine. 4.3% of them (67 thousand) were over 30 years old.
The average age of the active part of the fleet during this period was 12.8 years. Resold cars on the domestic market had an average mileage of 14.1 years, and imported from abroad — 10.2 years.
Most Ukrainians buy used cars from 2005 to 2008. The most popular year of vehicle production in Ukraine is 2008.
How much and what is disposed of?
Due to scrapping (ie for further disposal) in 2020 13,193 vehicles were deregistered, from January to September 2021 — 12,978. Of these, only 52% belonged to individuals, in other cases, cars were scrapped by legal entities (firms). Cars occupy 56% of the total, another 29% — trucks.
In 2021, VAZ cars were rejected the most (24%). In general, all models of the top 10 recycled cars are a legacy of the Soviet car industry.
The average age of vehicles rejected during January-September is 28.1 years.
In addition, according to Derzhkomstat, in 2020 only 17 tons of vehicles were disposed of. Given that the average curb weight of vehicles rejected in 2020 is 2.7 tons, it is easy to calculate the total number of officially disposed vehicles: 6 pieces. One can only guess where another 13,187 cars went.
Who should dispose of the car?
Today in Ukraine there are two documents related to the disposal of vehicles: the laws "On the disposal of vehicles" and "On waste". They regulate the conditions of admission to work of companies that plan to dispose of vehicles, and the rules of their work. However, none of them refers to the obligation to return the car for disposal, and there is no responsibility for improper handling of used cars.
As of October 2021, the State Register contains only 11 business entities that have the right to dispose of vehicles. Obviously, this is too little, given the total number of vehicles in Ukraine (about 14 million). However, this is how a market economy works: there is no demand for services, there is no supply.
Why didnʼt the recycling fee work?
In Ukraine, there are no taxes or other additional payments on old cars, and there are no incentives — tax rebates or compensation for buying newer cars. However, it should be understood that the purchasing power of Ukrainians is quite small. According to AUTO.RIA statistics, cars worth up to 10 thousand dollars — is 63% of total sales. And no incentive will force a person to buy a new car when he does not have the funds. Therefore, in Ukraine, cars are sold and bought exactly as long as it can physically perform the functions of moving from point A to point B.
Even when the car seems to have served its purpose, nothing motivates to dispose of it "according to the procedure". Laws say that today the disposal of vehicles is a free procedure, when neither party is obliged to pay anything. At the same time, at the so-called "metal bases" for a kilogram of "ferrous" metal can earn an average of 6 hryvnia. That is why Ukrainians are in no hurry to officially dispose of cars.
There was a period in 2013-2014 when the recycling fee was in force in Ukraine. Its size depended on the age of the car and could be several thousand dollars at the current exchange rate. It was charged for both new and used cars, and the ultimate payer of this tax were buyers — because cars have risen in price by the amount of the fee. Thus it was necessary to pay it at once, at car purchase, instead of at the moment of utilization. As a result, imports and sales in the market decreased significantly, the recycling fee was abolished, and no car was disposed of for the funds collected from Ukrainians.
The car market in Ukraine is still sufficiently regulated. The vast majority of vehicles are imported from abroad, and the tax burden on car owners is quite large: it can reach more than 100% of the cost of cars when imported from abroad. Therefore, the introduction of some additional taxes will only worsen the situation, encourage evasion of their payment (as was the case with the so-called "Eurobonds") and further obsolete the car market.
And what about recycling in Europe?
There is no single approach to car recycling in the European Union. In developed countries, the economy is encouraged to recycle cars. Higher purchasing power combined with affordable lending and leasing programs makes no sense in buying an old car. Repair of which, by the way, will cost more — because the level of salaries is also higher.
Therefore, for example, in Germany, it is difficult to sell a car that cannot pass the TUV — a mandatory technical inspection. Moreover, in some cases you will have to pay extra for recycling (in addition to some special programs from automakers). Throwing a car on the street or handing it over to an illegal scrap metal collection point is a risk of a significant fine.
In Poland it is a bit easier. Mandatory recycling does not exist, although in recent years the government has made several attempts to introduce recycling fees and cars. In practice, in Poland, only really used cars are disposed of, the restoration of which is not profitable in order to deregister them and not pay the annual compulsory insurance. Recycling points accept old cars "by weight" — they pay a fixed amount for each kilogram, depending on the weight of the vehicle.
One of the best examples of stimulating the disposal of old cars is France. There is a system of "bonus-malus". Everyone who recycles an old diesel car, the government guarantees a discount when buying a new electric car — up to 10 thousand euros!
By the way, all recycled cars in the European Union are not subject to re-registration and are not allowed to move. Documents on them are destroyed, and the VIN-code is entered into a special database.
So what to do with used cars in Ukraine?
Today, there are two main problems that need to be addressed.
The first is abandoned cars in the yards of big cities. Just take away even a car that has long "grown" into the ground, the law does not allow. Only a vehicle that significantly obstructs traffic can be evacuated. The procedure for declaring a car ownerless is long and complicated, only in court. This is where the legislative changes are needed, with the definition of concepts and procedures: what is a homeless car, during what period it should stand in the yard without movement, who will have the authority to evacuate, and what will be done with it later.
The second is the poor technical condition of cars that are still moving on the roads, but their condition is unsatisfactory. It is impossible to determine the exact number of such vehicles, as in Ukraine there is no mandatory technical inspection for private cars. It was abolished in 2011 due to objective factors — the total corruption of the system of that time.
According to Directive 2014/45/EU, Ukraine is obliged to introduce (or renew) a regular roadworthiness test for all categories of vehicles. This is one of the conditions that must be met on the path to European integration. It is the actual technical inspection (and not the sale of "coupons", as it was before) that may create the need to dispose of vehicles that will not be allowed to move due to unsatisfactory technical condition.
In addition, it is necessary to implement an effective system of control over the disposal of vehicles and their parts. That "accidentally" utilized on paper cars didnʼt appear on the same "metal bases". And also — the electronic register of the utilized transport and responsibility for improper treatment of such cars.
In order to implement effective reforms in the segment of used transport utilization, it is enough to analyze the approaches operating in the European Union and gradually implement them in Ukraine. It is only important to understand that each country has its own characteristics, so you need to implement only the experience that can work in the Ukrainian reality.