IS YOUR CAR A WRITE-OFF?

The last two months in Azerbaijan have been rich in events and news for car owners and anyone who even occasionally uses transport. First, fuel prices rose, then quick transition to the Euro-4 standard from April, bypassing Euro-3, was announced, then car loans were limited, and finally a very cryptic statement-assumption about the possible disposal of old cars was made.

Obviously, the government actively started to implement several targets simultaneously - to significantly upgrade the car fleet in the country, reduce the load on the roads, prevent a possible fuel shortage due to the rapid increase in its consumption and reduce the amount of harmful emissions from the use of old cars.

Is the government ready to pay motorists money for old cars only to withdraw them from circulation? And how can a car be disposed of and can this be done for the benefit of the budget?

"We must!" the government said

So, the sensational statement on the need to dispose of old cars in Azerbaijan was made recently by the head of the State Committee on Standardization, Metrology and Patents, Ramiz Hasanov. According to him, the number of cars in the country is growing, and some of them do not meet the high environmental standards. In order to improve the ecological situation and protect the health of citizens, the gradual and painless withdrawal of these cars from circulation is becoming topical.

At the moment, active work is under way in this direction. According to the requirements of state standard AZS 635-2012 "On the procedure of the certification of wheeled vehicles, their equipment and parts", from 1 May 2012, automotive vehicles (except all-wheel drive) imported into Azerbaijan or domestically produced must have the ABS anti-lock braking system and at least one airbag. Thus, the issue of permits for the production and importation of vehicles without these elements was suspended.

Hasanov promised that the State Committee on Standardization, Metrology and Patents will prepare tougher standards for the requirements of the safety system of vehicles. This is due to the increasing speed on autobahns (up to 110 km per hour), which requires an advanced security system. He also noted the possibility of increasing the number of airbags for the safety of car drivers.

Meanwhile, the opinion about the need to dispose of old cars is echoed by the head of the public relations centre at the Main State Traffic Police Department of the Interior Ministry, Police Colonel Kamran Aliyev. According to him, the fleet of vehicles needs to be updated, and to this end, the Cabinet of Ministers should take an appropriate decision. At the same time, Azerbaijan has no appropriate legal framework based on which we could ban the use of cars whose service life has expired in order to prevent air pollution and reduce the number of fatal traffic accidents.

"In Azerbaijan, old cars must be disposed of. Most fatal traffic accidents occur precisely with old cars whose service life has expired. Today, the traffic police cannot prohibit the use of old cars. Maybe these cars are mechanically in good condition, but they are worn out and their metal has no resistance to impact, which makes death in a traffic accident inevitable. These vehicles have much less security elements, and therefore, they cannot withstand an impact, which increases deaths during a crash. In our legislation there is no article envisaging, for example, a ban on the use of a car that has been used for more than 30-40 years. To do this, the Cabinet of Ministers must take an appropriate decision," he added.

Another opinion in favour of disposing of old cars came in time from Azerbaijani Minister of Ecology and Natural Resources Huseyn Bagirov. He believes that it is necessary to prepare a centralized programme in this field. "Azerbaijan has all conditions for disposing of cars, and given the economic situation in the country, we can implement this work," the minister said.

According to him, work is under way in the country to limit the use of old cars. "But the problem still exists, because cars being used today are also aging, so the need for such a programme is growing," he said.

Difficult, but possible

Thus, the government managed to intrigue car owners. If such statements are voiced by officials representing various agencies involved in the regulation of the car market, it means that the intention is quite serious. But will it be so easy to implement it?

The fact is that the idea to dispose of old car and pay compensation to their owners is not new and is being successfully implemented in many countries. This programme is designed to intensify the process of replacing old cars with new ones and thus improve road safety and the ecological environment.

Thus, the premium for recycled cars is already paid in 12 European countries. The US and Japanese governments began to implement similar programmes recently. The most successful in this area is Germany, where a premium of 2,500 euros was introduced in early 2009 for the disposal of a car that is older than 9 years. In France, the surcharge for vehicles older than 10 years ranges from 1,000 to 5,000 euros, depending on the level of the emission of harmful substances into the atmosphere, and a similar programme is being implemented in Italy, where a surcharge of 1,500 to 6,500 euros is paid for cars older than 9 years, also depending on the level of emissions. In the UK, when you hand over a car older than 10 years when buying a new one, 2,000 pounds are paid in compensation, while in Spain "the disposal premium" is 2,000 euros, in Luxembourg - 1,500-1,750 euros, Austria - 1,500 euros, Portugal - 1,000-1,200 euros, etc.

As far as the CIS is concerned, in Russia there is a federal programme that allows owners of old vehicles to hand them over for recycling and get a discount on the purchase of a new domestically-made iron horse instead. This programme is designed to intensify the process of replacing old cars and at the same time, support the Russian automotive industry. A similar programme, however, is being implemented in Ukraine, though unsuccessfully, and Kazakhstan is also preparing such a programme.

However, experts note, it is quite logical as these programs are the most viable and successful in countries that have their own developed automotive industry. It's simple: the government spends a certain amount from the state treasury to compensate the owners of old cars. Then these cars are recycles, the metal goes back to the car industry, new cars are made, and money returns to the budget. Everything is cost-effective and financially justified.

But in Azerbaijan, there is only one car factory - the Naxcivan Automobile Plant (NAP), whose construction began in 2008, and it was commissioned on 11 January 2010. In May 2009, as part of the Azerbaijan-China Business Forum held in Beijing, the NAP and Chongqing Lifan Industry (Group) Imp. & Exp. Co., Ltd. signed a contract on cooperation on the assembly of Lifan cars. The capacity of the plant is five thousand cars per year, but it is used only by half yet. That is to say it is too early today to talk about a complete automotive industry that can play a significant role in the economy.

According to Deputy Transport Minister Musa Panahov, the programme of recycling, as well as restrictions on the importation of vehicles not complying with the Euro 4 environmental standard will not significantly affect their numbers, as they will be replaced with new ones in any case. That is to say these measures will not solve the problem of traffic congestion and traffic jams. Therefore, Panahov stressed that to address this problem, the Ministry of Transport is actively working to widen roads, build road junctions and so on.

So it turns out that the main purpose of this idea is the resolution of environmental problems. It is also extremely important. But it quite a difficult task to make the recycling programme profitable today. It is necessary to develop a clear mechanism to use bought out cars, understand how to use them after collection (if we send them abroad - we need to find buyers out there, if we leave them in the country for remelting - it is necessary to take into account the capacity of the current metallurgical industry, etc.), determine fair compensation to motorists, facilitate the acquisition of auto loans for them, find "extra" money in the state budget, etc.

Yes, in theory, the financial capacity of the state is enough for this task. However, experts still agree that it is better to launch the programme after the feasibility study of the process. In short, we can conclude that a good idea has been proposed, but to digest and finish it, we need to do a great deal of work, research and analysis. And with the right approach to the implementation of this proposal, car owners, the domestic industrial sector and the government will all benefit.