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Age of the automobile
Boom times bust old bombs on our roads
14 Jul 2009
SCRAPPAGE schemes have been introduced in Europe and the US with the idea of ridding the roads of clunkers while supporting new-car producers.
So far, the Australian government has talked down the need for a similar scheme here, instead opting for business tax deductions of up to 50 per cent of the purchase price of new vehicles.
Australian Bureau of Statistics (ABS) figures show that while the average age of cars in Australia is high, it has been dropping without a scrappage scheme.
ABS numbers show the average age of the Australian vehicle fleet has been declining steadily since the late-1990s, from a high of 10.7 years in 1997 to 9.9 years in 2008.
This might not sound like a huge change, but when you consider there are 15.3 million vehicles on Australian roads, such a move is significant.
In the UK, the average age of vehicles stood at seven years when last measured by the national census at the start of last year. This might be lower than Australia’s average, but the age of vehicles in the UK is increasing. In 2003, it stood at 6.6 years.
In the US, Polk-sourced data presented by the US transportation department shows the American carparc is getting older, too, steadily rising from 6.5 years in 1990 to 9.2 in 2007.
However, it remained steady at 8.3 years from 1998 to 2001, but it has not dropped in any year since 1990.
The US ‘cash for clunkers’ program has just been introduced with incentives of up to $US4500 ($A5700) towards a new vehicle for customers who trade in a car that meets a range of requirements, including having an average fuel consumption figure of at least 13L/100km.
Whether this and other scrappage schemes will attract customers who were not already intending to purchase a new vehicle is yet to be seen.
Its effect on the average age of vehicles is also unknown, as the scheme is being introduced at the time of a sales downturn.
The recent oil price spike might have encouraged many people to trade up from older and generally less frugal vehicles, but there is no doubt more are now holding on to their current vehicles in a grim economic climate.
That certainly appears to have been the case in Australia previously, although there are many other factors that contribute to the average age of the national fleet, including the increased durability of vehicles, closer focus on roadworthiness of old vehicles in most states, and better than ever affordability.
The average age of vehicles, which is tied to new-car sales rates, spiked in the mid-1980s when intense inflation with spiralling car prices caused many potential customers to steer clear of showrooms and make do with what they had. The upward trend continued through the 1987 stock-market crash and subsequent recession of 1990-91.
It was not until the boom times of the late-1990s and 2000s that the age started to decrease.
We could be about to see the average age of Australian vehicles level off or start rising again.
Only time will tell whether the government’s business tax break is enough to stimulate sales and keep the new-car market rolling.
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