UPDATE: This story, originally published May 5, has been updated with manufacturer comment.
The car industry is preparing to lobby the Federal Government to introduce a “cash for clunkers” scheme to improve road safety and help the market recover from the longest sales slump since the Global Financial Crisis.
During the coronavirus crisis and associated lockdowns the car industry reported its sharpest month-to-month sales slowdown since records were kept – and the weakest April and May results in three decades.
Tighter finance requirements in the wake of the banking Royal Commission have contributed to a 26-month slowdown of new-car sales – the longest downturn since the Global Financial Crisis in 2008 and 2009.
Now the car industry is calling for a new stimulus package that will assist car buyers across more affordable price ranges into a new motor vehicle.
While the industry does not formally refer to the scheme as a “cash for clunkers” offer – because it wants to also apply the incentive to older vehicles that may be in good working order – the Australian Automotive Dealers Association (AADA) says the Federal Government needs to develop a “fleet renewal scheme”.
“This would provide a stimulus for the automotive industry and assist in making Australia’s passenger vehicle fleet safer, while also reducing emissions,” said James Voortman, the CEO of the Australian Automotive Dealers Association, which represents 60,000 employees at 3500 showrooms nationally.
“Fleet renewal schemes have been successfully applied in other industrialised economies throughout the world during economic downturns,” said Mr Voortman.
“Such a scheme would provide significant benefits to motorists in terms of safety and fuel consumption, with a wider societal benefit in the form of reduced vehicle emissions.”
The AADA says schemes that would encourage motorists to trade-up to a new car “are currently being considered by countries such as Germany, the United States and the United Kingdom to breathe life into automotive retail following the COVID-19 downturn”.
While most car companies are yet to comment on the proposal by the AADA, Volkswagen Australia said it would “support a fiscally responsible government plan to retire old cars and commercial vehicles”.
And this week the boss of Hyundai Australia, John Kett, told media: "Cash for clunkers would be interesting … as long as it’s done for the right reasons". The executive also expressed concern about the high average age of cars on Australian roads.
The AADA pointed to research from Australian crash test authorities that found vehicles built before the year 2000 represent just 20 per cent of vehicles on the road but are involved in nearly one-third of fatal crashes.
In 2017, the Australasian New Car Assessment Program (ANCAP) – which has compiled the crash test results of more than 500 vehicles since 1992 – conducted a head-on demonstration between a near-new 2015 Toyota Corolla and an older 1998 Toyota Corolla (pictured above).
The results showed the driver of the older Toyota Corolla was four-times more likely to die in a crash at that speed versus the driver of the newer Toyota Corolla.
A recent study by the Australian Automobile Association, the peak body representing the motoring clubs across the nation, showed that lowering the average age of Australia’s car fleet by one year “would save up to 1377 lives and create a $19.7 billion benefit in trauma and emission reductions over a 20-year period”.
According to the most recent Census data, the average age of all motor vehicles in Australia is 10.2 years, versus 11.1 years in Europe, 11.8 years in the US, and 13.2 years in Japan, according to data from aggregator website Statista.
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