Fleet Renewal: Where Do the Cars That Europe No Longer Wants End Up?

This article was originally published in our newsletter "Mobility" Analysis, January 14, 2021.

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In October 2020, the United Nations Environment Programme (UNEP) published the report “Used Vehicles and the Environment – A Global Overview of Used Light-Duty Vehicles: Flow, Scale, and Regulation” ^[1]. In this publication, The UN program analyzes the export of used vehicles from Europe, the United States, and Japan. Since this topic is rarely discussed, it piqued our curiosity, and we wanted to share a few highlights from this publication here. The report covers approximately 14 million vehicles exported between 2015 and 2018, as illustrated below. These are relatively small volumes. To provide some context, let’s consider the case of Europe in 2018: While 17.7 million new vehicles were sold in Europe, approximately 2 million used vehicles were exported, bringing the total vehicle fleet to nearly 300 million.

As for importing countries, contrary to what one might expect, it is not the countries with low per capita income that are the main destinations for used vehicles. The UNEP study reveals that Countries with average per capita income are the largest importers of these vehicles.

In 2018, for example, Serbia was the European Union’s top importer of used cars, with 260 thousand vehicles, followed by Nigeria (154 thousand), Libya (141 thousand), Ukraine (138 thousand), and Bosnia and Herzegovina (133 thousand). A country’s imports of used vehicles depend on the size of its automotive market, the economic competitiveness of foreign used vehicles, and national regulations on the matter. This last factor varies greatly from region to region. In the Americas, for example, a large number of countries prohibit the importation of used vehicles, whereas African countries have very few, if any, restrictions. The following charts provide an overview of restrictions regarding the age and environmental performance of imported used vehicles.

From a climate perspective, the export of used vehicles leads to a shift in emissions to developing countries.This "communicating vessels" effect puts the benefits of renewing the vehicle fleet in Europe into perspective. While new vehicles that are more fuel-efficient and produce fewer carbon emissions reduce traffic emissions in Europe, we must take into account the fact that some of the vehicles being phased out of the fleet are used abroad. At the same time, the export of used vehicles can extend their lifespan. Thus, emissions associated with their manufacture—amounting to about 10% of emissions from use in Europe—would be spread out over a longer period of time and would therefore be relatively less significant. However, extending the product’s lifespan also means that it will be used for a longer period of time, vehicles that are much less efficient than newer models. A balance between these two factors can be found by analyzing the life-cycle greenhouse gas emissions of new and used vehicles.

If the total emissions (from manufacturing and use) of a new vehicle, when calculated per kilometer traveled, are lower than the in-use emissions of an older vehicle, then replacing the vehicle is more advantageous than extending its service life. Finally, national authorities must consider factors other than greenhouse gas emissions when making decisions regarding restrictions on the import of used vehicles, such as air pollution, safety, and economic impacts.

Article written by Rodrigo Baranna (Senior Consultant) rodrigo.baranna@carbone4.com

Sources: ^[1]UNEP