MAY 2022 1 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY MOBILITY AND TRANSPORT CONNECTIVITY SERIES MOTORIZATION MANAGEMENT FOR DEVELOPMENT An Integrated Approach to Improving Vehicles for Sustainable Mobility ii MOBILITY AND TRANSPORT CONNECTIVITY SERIES © 2022 The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved This work is a product of the staff of The World Bank. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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MOTORIZATION MANAGEMENT FOR DEVELOPMENT An Integrated Approach to Improving Vehicles for Sustainable Mobility Lead author: Roger Gorham Contributors: Dipan Bose, Maria Cordeiro, Georges Darido, John Koupal, Raman Krishnan, Kazuyuki Neki, and Yin Qiu iv MOBILITY AND TRANSPORT CONNECTIVITY SERIES Acronyms ASI Avoid-Shift-Improve MVIMS motor vehicle information management system AVRP Accelerated Vehicle Retirement Program NDCs Nationally Determined Contributions CITA International Motor Vehicle Inspection Committee NMHCs non-methane hydrocarbons CKD complete knock down NOx nitrogen oxides CO carbon monoxide ODA official development assistance CO2 carbon dioxide OEM original equipment manufacturer DPOs Development Policy Operations PM particulate matter DPOS Dynamic Profile of Standards PPP public-private partnership ELV End-of-Life Vehicle PTI periodic technical inspection GHG greenhouse gas SKD semi-knock down GRSF Global Road Safety Facility SOE state-owned enterprise IBRD International Bank for Reconstruction and SOx sulfur oxides Development SuM4All Sustainable Mobility for All ICE internal combustion engine SUV sport utility vehicle IDA International Development Association UNFCCC United Nations Framework Convention on IPF Investment Project Financing Climate Change KGGTF Korean Green Growth Trust Fund VIMM Vehicle Inspection Management Module MaaS Mobility as a Service VKT vehicle kilometers travelled MM Motorization Management v MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Contents Acronyms.............................................................................................................................................................................................iv Acknowledgments........................................................................................................................................................................ viii Executive Summary.........................................................................................................................................................................ix Introduction............................................................................................................................................................................................................................................................x Motorization in the Developing World........................................................................................................................................................................................................x Motorization Management in the Sustainable Transport Agenda.................................................................................................................................................xi Elements of the Motorization Management Framework............................................................................................................................................................... xiii Operationalizing Motorization Management in Low- and Middle-Income Countries....................................................................................................... xvi 1. Introduction..................................................................................................................................................................................1 2. Motorization in the Developing World.............................................................................................................................9 Motorization As Technology Diffusion......................................................................................................................................................................................................10 The State of Motorization Globally..............................................................................................................................................................................................................11 3. Motorization Management in the Sustainable Transport Agenda.....................................................................19 Definition of Motorization Management.................................................................................................................................................................................................20 Motorization Management in the Policy Context...............................................................................................................................................................................20 Key Concepts for Framing Motorization Management Policy.......................................................................................................................................................34 4. Elements of the Motorization Management Framework...................................................................................... 45 Establish a Clear and Transparent Policy Process for Setting Goals and Priorities............................................................................................................47 Gather and Assess Data with Continuous Analytics..........................................................................................................................................................................47 Adopt and Promulgate Vehicle and Fuel Standards Prospectively Using Dynamic Profile of Standards for Vehicle Stock Evolution........51 Strengthen the Nuts and Bolts of Vehicle Management.................................................................................................................................................................53 Strengthen Market Mechanisms for Funding and Managing Vehicle Stock Growth and Turnover..............................................................................85 5. Toward a Strategy to Operationalize Motorization Management in Low- and Middle-Income Countries.................................................................................................................................................................................... 92 International Framework for Trade of Secondhand Vehicles........................................................................................................................................................93 Diagnostic Studies to Facilitate Adoption of Motorization Management Approaches.....................................................................................................96 Support Low- and Middle-Income Countries’ Establishment and Strengthening of Motorization Management Policies and Institutions through Official Development Assistance Resources and Technical Assistance..................................................................................................96 Establishment of Motorization Management Observatories.........................................................................................................................................................99 6. Appendices............................................................................................................................................................................... 101 Appendix A. Comparison of World Road Statistics Motorization Data with Other Sources of Data.......................................................................... 102 Appendix B: Experience with Vehicle Scrappage Programs......................................................................................................................................................... 108 vi MOBILITY AND TRANSPORT CONNECTIVITY SERIES Boxes Box 1.1. Prevalence of Used Vehicle Imports Among Low- and Middle-Income Countries...........................................................3 Box 1.2. Used Vehicles Exported to Africa: Summary of a Study of the Quality of Used Vehicles Exported from the Netherlands to African Countries...............................................................................................................................................5 Box 1.3. Rapid Urbanization and Modernization Rates in Africa.......................................................................................................7 Box 3.1. What Kinds of Policies Are Made Possible through Motorization Management?. ......................................................... 21 Box 3.2. Road Safety Dimensions of Motorization Management................................................................................................... 24 Box 3.3. Air Pollution Dimensions of Motorization Management. .................................................................................................. 26 Box 3.4. Climate Change Dimensions of Motorization Management............................................................................................ 28 Box 3.5. Motorization Management to Support Sustainable Development and Sustainable Lifestyles. ................................... 32 Box 3.6. Ensuring Continuity of Fiscal Resources. ............................................................................................................................. 34 Box 3.7. Use of Age-Based Restrictions As a Proxy for Vehicle Performance, Speculation on Underlying Biases................... 37 Box 4.1. New Zealand’s Vehicle Import Certification Process. ......................................................................................................... 62 Box 4.2. Use of On-Road Testing in Morocco.................................................................................................................................... 70 Box 4.3. The Republic of Korea’s End-of-Life Vehicles Management. ............................................................................................. 82 Box 5.1. ECOWAS Regional Trade Bloc Introduces Harmonized Import Vehicle and Fuel Standards. ....................................... 95 Figures Figure E.1. Nuts and Bolts of Effective Governance of Motor Vehicle Stocks................................................................................ xv Figure B1.1.1. Primary Trade Flows of Used Vehicles.........................................................................................................................4 Figure B1.1.2. Used Vehicle Import Share for Select Low- and Middle-Income Countries, 2018..................................................4 Figure 2.1. Motorization Process as Technology Diffusion............................................................................................................. 10 Figure 2.2. Number of Vehicles in Use by Region between 2000 and 2018. ................................................................................. 11 Figure 2.3. Change in the Number of All Types of Vehicles in Use between 2000 and 2018. ..................................................... 12 Figure 2.4. Proportion of Vehicle Types in Use in the World in 2018............................................................................................. 13 Figure 2.5. Number of Passenger Cars and Motorcycles in Use by Region between 2000 and 2018....................................... 14 Figure 2.6. Number of Passenger Cars and Motorcycles in Use by Income Level between 2000 and 2018............................ 15 Figure 2.7. Number of Vehicles versus GDP per Capita. .................................................................................................................. 15 Figure 2.8. Trends in the Number of First Registration, Production, Import, and Export of Vehicles, Excluding Motorcycles.... 16 Figure 2.9. Overview of Number of First Registration, Production, Import, and Export of Vehicles, in 2018, by Country...... 17 Figure 2.10. Traffic Volumes by Region between 2000 and 2018.................................................................................................. 18 Figure B3.2.1. Vehicle Killing Potential Metric for Low- and Middle-Income Countries Based on Three Fatality Estimates. .. 25 Figure 3.4.1. Euro Emission Standards and CO2 Intensity Reduction............................................................................................ 29 Figure 3.4.2. Changes in Road Transport Energy Demand by Fuel in India in the Stated Policies Scenario, 2019–40. ........... 30 Figure 3.1. Plot of In-Vehicle Traffic Deaths Against Age-Related Import Restrictions................................................................ 36 Figure 4.1. Core Elements of a Motorization Management Approach.......................................................................................... 46 Figure 4.2. Positive Feedback Loop Connecting Enablers, Features of Public Intent Data, and Greater Development Value.... 50 Figure 4.3. Nuts and Bolts of Effective Governance of Motor Vehicle Stocks............................................................................... 54 vii MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Figure 4.4. Typical Structure of Motor Vehicle Information Management System (MVIMS)....................................................... 55 Figure 4.5. Structure of Vehicle Inspection Management Module................................................................................................. 57 Figure 4.6. Key Users of VIMM Module.............................................................................................................................................. 58 Figure 4.7. Stylized Structure of Funds Flows for Scale-Up Investments to Facilitate Transition to E-Buses............................ 87 Figure 4.8. Stylized Structure of Funds Flows to Facilitate Replacement of Poor-Quality with Better-Quality .............................................................................................................................. 88 Vehicles in Light-Duty Commercial Fleets. Figure A.1. Comparison of OICA and IEA Data with WRS Data for Two Key Parameters.......................................................... 102 Figure A.2. Number of Registered Vehicles. .................................................................................................................................... 103 Figure A.3. Motorization Rates in East Asia and the Pacific Region............................................................................................. 103 Figure A.4. Motorization Rates in Europe and Central Asia.......................................................................................................... 104 Figure A.5. Motorization Rates in Latin America and the Caribbean Region.............................................................................. 104 Figure A.6. Motorization Rates in the Middle East and North Africa. ........................................................................................... 105 Figure A.7. Motorization Rates in North America........................................................................................................................... 105 Figure A.8. Motorization Rates in South Asia.................................................................................................................................. 106 Figure A.9. Motorization Rates in Sub-Saharan Africa................................................................................................................... 106 Images Image 1.1. Tampered Car in an East African Country, with Catalytic Converter and Antilock Brake System Removed.............2 Image B4.1.1. Inspection Facility for Newly Arriving Used Vehicles in Wellington, New Zealand.............................................. 63 Image B.4.2.1. Mobile Testing Unit Performing Validation Check Outside a PTI Testing Center in Casablanca, Morocco.... 70 Image 4.1. Toyota Vehicle Service Repair Center in Addis Ababa, Ethiopia, in 2016. ................................................................... 73 Image 4.2. Example of Single-Unit Truck Cab and Chassis (Fiat Ducato from AL-KO)................................................................. 78 Image 4.3. Example of Single-Unit Truck Cab and Chassis (Chevrolet 3500 Crew Cab).............................................................. 78 Image 4.4. Example of Bus Chassis (Mercedes-Benz OF1721). ....................................................................................................... 79 Tables Table 2.1. The Number of Production, Export, Import, and First Registration of Vehicles in 2018 ........................................... 17 Table 3.3.1. World Health Organization Guidelines for Ambient Air Quality Concentrations for Particulate Matter and Ozone ............................................................................................................... 26 Table 3.3.2. Compliance with WHO Ambient Air Quality Guidelines for Annual Mean PM2.5 Concentrations.......................... 26 Table 3.4.1. Motorization Management and Other Policy Approaches to Influence Decarbonization Pathways in Transport . 28 Table 4.1. Assessment of the Openness of Data, by Country Income Group............................................................................... 49 Table B.1. Characteristics of Some Key Accelerated Vehicle Retirement Programs from Around the World. ........................ 108 viii MOBILITY AND TRANSPORT CONNECTIVITY SERIES Acknowledgments This report was made possible with the support of the Korean Green Growth Trust Fund (KGGTF) and the Global Road Safety Facility (GRSF). The lead author of the report is Roger Gorham (senior transport economist, World Bank), who received invaluable contributions from Georges Darido (lead transport specialist, World Bank), Maria Cordeiro (climate change and transport expert, consultant, World Bank), Yin Qiu (transport expert, consultant, World Bank), Dipan Bose (senior transport specialist, World Bank), Raman Krishnan (senior digital development special- ist, World Bank), Kazuyuki Neki (junior professional officer, World Bank), and John Koupal (principal engineer, Eastern Research Group, Inc.). Colleagues who contributed material to earlier versions of this work include Olivier Hartmann (senior private sector specialist, World Bank), Henry Kamau (director, Sustainable Transport Africa), Robin Kaenzig (independent transport economist), and Jane Akumu (program officer, UNEP). Overall leadership for the report’s development was provided by Binyam Reja, acting global director for the Transport Global Practice at the World Bank. The authors are grateful for the valuable input and feedback received from peer reviewers and other col- leagues at various iterations, including Veronica Ines Raffo (senior infrastructure specialist, World Bank), Henrik Rytter Jensen (senior energy specialist, World Bank), Daniel Benitez (senior transport economist, World Bank), Cecilia Briceño-Garmendia (lead economist, World Bank), Dominic Patella (senior transport special- ist, World Bank), Mauricio Osses (professor of mechanical engineering, Universidad Técnica Federico Santa María), Aliosha Reinoso (consultant), Eduard Fernández (executive director, CITA), Rob de Jong (head, Mobility Unit, UNEP), and Lew Fulton (co-director, STEPS Program, Institute of Transportation Studies, University of California, Davis). ix MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Executive Summary x MOBILITY AND TRANSPORT CONNECTIVITY SERIES Introduction Across the developing world, countries are experi- key source of harmful air pollution, including carbon encing rapid growth in urbanization and motoriza- monoxide (CO), fine particulates (PM2.5), sulfur oxides tion. While high motorization rates potentially mean (SOx), and ozone precursors (oxides of nitrogen and that more people will be able to claim the benefits various hydrocarbons), and the amount of these pol- of improved accessibility to goods and services as lutants they emit is directly related to how the vehi- a consequence of enhanced mobility, there are cle was built and how well it is maintained. Finally, questions about the sustainability of this future. Will the profile of the vehicle fleet—what is the size and countries be able to build and maintain infrastructure weight of vehicles in the fleet, how big are their to accommodate increasing numbers of vehicles? engines, what kind of power control technology do Will the increasing number of vehicles and their they use, and how did their manufacturers engineer characteristics support attainment of the Sustainable the technology of the vehicle to balance power with Development Goals (SDGs)? Will they put in jeopardy efficiency—affects the (fossil) fuel consumption of countries’ ability to meet their climate commitments the vehicle stock as a whole, and, consequently, the under their Nationally Determined Contributions greenhouse gas (GHG) emissions profile of the road (NDCs)? transport sector. From a development impact standpoint, the nature This report presents the World Bank’s Motorization of a country’s motor vehicle stock and how it grows Management (MM) framework, which is intended affects three key and tangible outcomes. First, the to support client countries in the development of quality of the motor vehicle stock affects road safety policies and measures aimed at managing vehicle outcomes—that is, the number of people killed or stocks in a proactive, phased, and systematic manner seriously injured in motor vehicle crashes. The char- to make them safer, cleaner, and more fuel efficient. acteristics of vehicles and their fitness or roadworthi- The MM framework reflects a series of policy consid- ness can affect fatality and serious injury outcomes. erations and programs that can be implemented to Second, the quality of the motor vehicle fleet affects improve the quality of fuels and vehicles in a coun- air quality, particularly in cities. Motor vehicles are a try’s stock. Motorization in the Developing World Fundamentally, motorization is a technology diffu- Where on the curve a country is at any point in time sion process, and, typical of such processes, follows will affect whether vehicles currently in use will com- a logistic distribution over time (see Figure 2.1). prise a large or a small proportion of the vehicle stock Vehicle adoption begins relatively slowly, but then five years from now. The implication is that the kinds progresses rapidly at the steepest point in the slope, of policies and measures that might be appropriate before tapering off as the society approaches a hypo- at the lower end of the steep curve reflected in Figure thetical “saturation” level, which, in North America, 2.1 might be quite different from those that would be is identified as around 600 cars per 1,000 persons. appropriate toward the upper end of that curve. Understanding the logistic nature of motorization processes is important from a policy standpoint. xi MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY As of 2018, actual motorization penetration levels cars, vans, and pickups account for about 73 percent worldwide were 266 motor vehicles per 1,000 per- of all in-use vehicles, while motorcycles and other sons, but motorization rates vary substantially by two-wheelers account for an additional 23 percent. region. The North American median is around 657 Only about 4 percent of the worldwide vehicle stock vehicles per 1,000 persons, while in Sub-Saharan are trucks, which is striking considering how depen- Africa, median motorization penetration is only 20 dent most economies are on road transport. vehicles per 1,000 persons. Worldwide, passenger Motorization Management in the Sustainable Transport Agenda MM is a deliberate, diligent, and coordinated process the evolution of a country’s vehicle stock. Developing to shape, through public policies and programs, the right policies, to be sure, is an important aspect the profile, quality, and to some degree, quantity of MM, but so is the development and strengthening and intensity of use of the motor vehicle stock as it of institutions to carry out policy analysis, to ensure progresses through a country’s motorization pro- compliance, and to manage stakeholders and com- cess. MM seeks to shape the way motor vehicles munications, to name a few. MM policies will also are managed throughout their effective in-use life affect government revenues and expenditures, and in a given country, in order to improve safety, envi- these impacts also fall within the purview of MM. ronmental, and fuel consumption outcomes. This life-of-vehicle approach means targeting policies and Specifically, MM is concerned with five key policy out- measures at different phases of vehicle life, includ- comes aligned to the development agenda. These are: ing vehicle entry, active use, and vehicle exit, and the conditions that underlie demand for motoriza- • Road safety – making the stock of in-use vehicles tion. Because meeting some of these objectives also safer, both in terms of avoiding crashes and in requires improvements in fuel quality and availability their safety performance when crashes do occur in certain cases, MM necessitates consideration of fuels and vehicles as a system. MM also looks at the • Air quality – making the stock of in-use vehicles important aspects of reuse and recycling of vehicles, (and the fuels they use) cleaner parts, and materials linking to the overall vehicle life cycle from vehicle design, production, and post-pro- • Climate mitigation – making the stock of vehicles duction until scrappage. being used more fuel efficient As with other aspects of the sustainable transport • Sustainable transport and lifestyles – using motor agenda, MM is not concerned only with policies per vehicle governance to support other priorities in a se, but rather the entire governance ecosystem that broad, sustainable transport agenda gives rise to desirable policy outcomes affected by xii MOBILITY AND TRANSPORT CONNECTIVITY SERIES • Fiscal stability – ensuring continuity of resources Active use by managing the fiscal impact accompanying the motorization process. 3. Enforcement actions are more effective if accom- panied by strong communication and education In some cases, policies can promote synergies among programs. these objectives, while in others, trade-offs need to be negotiated. Different countries, or different 4. Lifestyle or economic transition points are the governments, might prioritize these objectives dif- most important moments to influence house- ferently. A key focus of MM, therefore, needs to be holds and firms’ decisions about their vehicle not only developing strong policies, but helping to fleets; at these moments, they are susceptible to develop a robust policy-making process. being nudged toward more sustainable choices when information and finance options are To highlight the complexity of negotiating these available. different potential objectives in a broader context of development policy, 10 concepts are proposed to Vehicle exit stimulate discussion. These concepts relate to how vehicles are accepted into a country, how they are 5. Changing the permitted uses of current vehicles monitored while they are used, how they are cycled in the stock as they age may be a more politically out of the active stock, and how demand for motor- acceptable way to manage risks caused by usage ization grows. Policy makers need to determine for of obsolescing vehicles rather than abruptly ban- themselves how relevant these concepts are for their ning their use. situation. 6. Assigning lifetime usage limits when vehicles are Vehicle entry added to the national stock through either import or manufacture could be an equitable way to 1. To protect public health and safety, vehicle impor- address the long-term challenge of an aging and tation or manufacturing thresholds should be obsolete vehicle stock. used; to meet national public policy goals, eco- nomic incentives targeted to vehicle purchasers, 7. For heavy-duty vehicles (HDVs) and LDVs used for manufacturers, or importers generally work best. commercial transport, incentivizing vehicle turn- over (for example, replacement and scrappage) 2. Age is not a good proxy for air quality, safety, is as important as the quality of vehicles brought or fuel-efficiency performance characteristics of in. For LDVs used for own-account transport, the light-duty vehicles (LDVs), especially those in non- relative importance of vehicle turnover/replace- commercial service; to improve LDV stocks, poli- ment depends on where an individual country is cies should focus on specific air quality or safety on the motorization curve; incentivizing turnover performance features, or fuel intensity character- becomes more important as motorization pene- istics, rather than age alone. tration increases. xiii MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY 8. Management of End-of-Life Vehicles (ELVs) and 10. Managing motorization should be understood batteries must not be an afterthought, but rather as one element of a broader, sustainable trans- built into the MM framework from the beginning. port approach; MM policies should align with that approach and take into account both vicious and Motorization demand virtuous effects broader policies may have on motor vehicle demand. 9. Although MM focuses on vehicles, it is the use of those vehicles that is the source both of envi- ronmental and safety risks as well as accessibility benefits to societies. Elements of the Motorization Management Framework Effecting change to motor vehicle stocks requires 1) Facilitating a clear and transparent a clear method for implementing the principles policy-making process laid out above. The methodology recommended in this paper identifies five core elements of an MM In Organisation for Economic Co-operation and approach: (1) facilitating a clear and transparent Development (OECD) countries with mature motor policy-making process by which to establish goals vehicle manufacturing industries, as well as in China and priorities; (2) gathering and assessing data with and India, a common refrain among manufactur- continuous analytics; (3) adopting and promulgating ers and policy makers alike is that transparency prospectively vehicle and fuel standards consistent is as important as the specific policies governing with the vision; (4) strengthening the “nuts and bolts” vehicle manufacturing requirements themselves. of motor vehicle stock governance and human capi- Manufacturers need to know what the rules of tal development in the automotive value chain; and the game are and be afforded ample time to plan (5) working to ensure that vehicle stock growth and their strategies accordingly. Governments in these turnover is adequately addressed in vehicle market regions have responded by establishing clear rules mechanisms available in the country. and expectations for vehicle performance and fuel xiv MOBILITY AND TRANSPORT CONNECTIVITY SERIES specifications years in advance of when these rules 3) Adopting and promulgating vehicle and fuel take effect. In many low- and middle-income coun- standards prospectively using dynamic profile of tries without a motor vehicle manufacturing industry, standards for vehicle stock evolution such long-term clarity and transparency is lacking. The result for these countries is not only that doing Goal setting and analytics should lead to the prom- business in the automotive sector is challenging, ulgation of transparent vehicle and fuel standards, but also that countries have little clout with which to both for the addition of vehicles to the national actually influence vehicle markets. Individual coun- stock and for the minimal requirements of in-use tries, or, better yet, economic blocs, can change this vehicles to be allowed to remain circulating, with the dynamic by being more deliberative and structured in understanding that vehicle and fuel standards are policy processes. necessary, but not sufficient, elements of a success- ful MM program. A public process to define a policy 2) Gathering and assessing data vision within a given vehicle market is, therefore, an with continuous analytics important part of MM. Dynamic Profile of Standards (DPOS) addresses this need as it provides a blueprint Motorization policy should be grounded in empiri- for industry and stakeholders about how regulatory cal analysis based on evidence of what works. This standards for vehicles to be added to the national means developing mechanisms to be able to observe vehicle stock will be expected to change over a mul- and track characteristics of car and truck ownership, tiyear time frame, for example, over a decade. The motor vehicle use, energy consumption by different objective of establishing a DPOS is to avoid repetitive kinds of vehicles, on-road fuel intensity, new car fuel ad hoc processes to tighten regulations and instead intensity, and other characteristics of road transport to send clear signals to the import and manufactur- at the national level. These parameters also need to ing/assembly industries in or targeting a country or be gauged against other factors in the economy, such region so that they can make adjustments. as fuel prices (and fuel price fluctuations), economic indicators, industrial structure, etc. The fundamental 4) Strengthening the ‘nuts and bolts’ of basis for this type of analytics is access to good qual- motor vehicle management ity data at a reliable and sustainable frequency. Much of the data for these types of analytics are already The “nuts and bolts” of motor vehicle management collected by national and subnational governments are often overlooked by the development commu- on an ongoing basis, in the form of customs regis- nity, but they are the core functions of governance tries and vehicle registration rosters. What is needed that probably have greater impact on the success of a are clear policies, and effective procedures, to make given policy than the policy itself. Ten “nuts and bolts” this data available to the public and to researchers on systems are identified, as shown in Figure E.1. a regular basis, in a manner that respects data pri- vacy and integrity requirements. xv MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Figure E.1. Nuts and Bolts of Effective Governance of Motor Vehicle Stocks Overall systems governance 1. Motor vehicle information management systems Government oversight of vehicles and Development of human capital and fuels sustainability of automotive value chain 2. Certification systems for addition 6. Preventive maintenance and repair of vehicles to national stock industry 7. Quality assurance for vehicle parts 3. Periodic technical inspections production, acquisition, and distribution 8. Quality assurance for vehicle body 4. On-road enforcement construction and modification 9. End-of-Life Vehicle (ELV) 5. Fuel quality assurance management Change management 10. Public engagement and outreach Source: Original figure produced for this publication. In essence, these 10 systems form growth to meet its development objectives. In low- the core of the MM agenda. and middle-income countries, three factors often constrain motor vehicle markets: low purchasing 5) Working to strengthen market mechanisms for power, lack of credit availability, and lack of diversity funding and managing vehicle stock growth and of vehicle availability models, such as formalized figure 2.1 turnover third-party leasing. While there are no easy answers to these challenges, and their importance varies MM cannot be conceived of solely as an initiative of not just by country, but also by transport subsector, government, or a question of governance of motor some common elements are emerging that may form vehicle stocks. There also needs to be proactive atten- part of the solution for different subsectors. These tion paid to the incentives and financing environment elements include aggregating demand for vehicles in which motor vehicle purchases—both fleets and toward fleets, where possible; eliminating capex bur- individual vehicles—occur. Experience in high-income den for individual operators; isolating different kinds countries suggests that access to credit and varied of risk (for example, payment from demand risks) (and competing) models of vehicle ownership and so that they can be explicitly and separately treated availability are key. Depending on where a country is where feasible; and creating stable, long-term, and along its motorization curve (see Figure 2.1), it may verifiable flows that can be securitized. need to emphasize vehicle stock turnover more than xvi MOBILITY AND TRANSPORT CONNECTIVITY SERIES Operationalizing Motorization Management in Low- and Middle-Income Countries There are four key ways that international finance Second, IFIs can support diagnostic studies to facili- institutions (IFIs) and international development tate adoption of MM approaches. Diagnostic studies institutions, such as the World Bank, can support would identify an appropriate sequence of actions to countries to operationalize MM approaches. First, be undertaken in a specific context, including estab- international development institutions can help to lishing a policy development process. Third, IFIs can strengthen the international framework govern- support the establishment and strengthening of MM ing the cross-border trade in secondhand vehicles. policies and institutions in low- and middle-income Specifically, there is a need to: countries by assigning official development assistance (ODA) resources and technical assistance. Elements • Establish rules for acceptable practice in the of an MM program can be supported through pol- export of used vehicles; icy lending. For example, promulgation of DPOS or adopting legislation or tariff regimes to facilitate • Establish data architecture and protocols to improved governance can all be supported with facilitate exchange of vehicle history information well-designed policy-based lending. Other elements among countries; can be supported through traditional Investment Project Finance. In addition, finance can support • Strengthen trade accounting frameworks to the private or public sectors to make (or incentivize) enable tracking of trade in secondhand goods, investments in vehicle fleet turnover. Finally, IFIs and including vehicles and vehicle parts; and international development institutions can help to establish or strengthen regional MM observatories, • Strengthen protocols for materials recovery in a which can help fulfil the need for continuous analytics. globalized circular economy. 1 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY 1. Introduction 2 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Across the developing world, countries are experi- substantial burdens for society: import of second- encing rapid urbanization and motorization growth. hand (used) vehicles (see Box 1.1) and growth in the While high motorization rates potentially mean that propagation and use of two-wheeled vehicles. Both more people will be able to claim the benefits of avenues present a double-edged policy sword for improved accessibility to goods and services through governments. On the one hand, a large proportion enhanced mobility, it raises questions about the of used vehicles are often substandard. Anecdotal sustainability of this future. Will countries be able to reports have long suggested that importers reg- build and maintain infrastructure to accommodate ularly remove key safety features like airbags and increasing numbers of vehicles? Will the increasing emissions control equipment in order to meet real number of vehicles and their characteristics support or perceived performance requirements from buy- attainment of the Sustainable Development Goals ers, and many used vehicles are traded whose (SDGs)? Will they put in jeopardy countries’ abil- physical condition cannot be vouched for. A recent ity to meet their climate commitments under their study of secondhand vehicles for export in the Port Nationally Determined Contributions (NDCs)? of Rotterdam (Netherlands ILT 2020) found only 34 percent had roadworthiness certificates (see Box 1.2. In many low- and middle-income countries, the Used Vehicles Exported to Africa: Summary of a Study demand for growth of the motor vehicle stock is of the Quality of Used Vehicles Exported from the met through two common practices which create Netherlands to African Countries for more detail). Image 1.1. Tampered Car in an East African Country, with Catalytic Converter and Antilock Brake System Removed Source: Henry Kamau. 3 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY On the other hand, for the importing countries, the maneuverability makes them prone to be co-opted used vehicles imported are often already of higher for criminal use, which means their accessibility ben- quality than vehicles in the vehicle stock, so if there efits may be at least partially offset by their deleteri- were mechanisms to ensure that these vehicles were ous effects on personal security. In addition, in many being used to replace, rather than add to, existing countries, two-stroke engines are still allowed (or vehicles, then the process of importation of used tolerated) in new two-wheelers, contributing substan- vehicles would amount to a net benefit to society. tially to local air pollution. Likewise, the expansion of two-wheelers also comes with benefits but substantial costs to low- and mid- In low- and middle-income countries, addressing dle-income countries. Their prevalence greatly the double-edged sword of used vehicle and two- enhances accessibility in both rural and urban envi- wheeler growth means managing the growth of the ronments, particularly for low-income households. motor vehicle fleet as an important dimension of a However, they are associated with greater inci- sustainable transport policy. Not only does motoriza- dence of road-crash-related fatalities and serious tion have a multiplicity of impacts in terms of public injuries, and increased severity of the latter; their health, use of public space, loss of productivity from volumes and the behavior of two-wheeler drivers’ congestion, and others, it also brings challenges efforts to skirt congestion can often hinder efforts associated with limited institutional, organizational, to improve public transport performance; and their and managerial capacity to manage these impacts. Box 1.1. Prevalence of Used Vehicle Imports Among Low- and Middle-Income Countries In October 2020, the United Nations Environment Programme (UNEP) released a flagship report, Used Vehicles and the Environment: A Global Overview of Used Light Duty Vehicles—Flow, Scale and Regulation (UNEP 2020). The study provided the first quantitative look at the global flow of used light-duty vehi- cles (LDVs) available. It showed that between 2015 and 2018, 14 million LDVs were traded interna- tionally, primarily exported from the European Union (EU), the United States, and Japan to low- and middle-income countries. The picture of the primary trade flows that emerge from this study is shown in figure B1.1.1. 4 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Figure B1.1.1. Primary Trade Flows of Used Vehicles Source: UNEP 2020. Based on the numbers generated from the UNEP study, the World Bank has estimated used vehicle import shares for a number of low- and middle-income countries. These are shown in figure B1.1.2. Figure B1.1.2. Used Vehicle Import Share for Select Low- and Middle-Income Countries, 2018 100% 80% 60% 40% 20% 0% Mo eria Pa ssia Jam ria Re la Leb Iraq Ge on ia go mi Gua anon d I ar Ug ica Ca voire Nig na Bu ne ya a Gu i a Ru ia Uk lic My anka rze gal tan a Ke a Gh a Ca golia nin Sri da di ico Tan rgia i ne bi ny vin an tema zan od b Co anm b Lib To an a rai ro lga a He Sene Sau Mex Ser Ara Be kis pu o go mb me n L te ni c a& s ni Do Bo Source: World Bank analysis based on UNEP 2020 data. Extrapolating these numbers to all low- and middle-income countries using a regression analysis, the World Bank estimates that 70 percent of such countries imported more used vehicles than new ones in 2018, and 58 percent imported more than three times as many used vehicles as new ones. Source: World Bank using inputs from UNEP 2020. 5 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Box 1.2. Used Vehicles Exported to Africa: Summary of a Study of the Quality of Used Vehicles Exported from the Netherlands to African Countries In October 2020, the Human Environment and Transport Inspectorate (ILT) of the Netherlands Ministry of Infrastructure and Water Management released the results of a study on the quality of used vehicles exported to Africa (Netherlands ILT 2020). The objective of this study was to anticipate upcoming new and harmonized policies from African countries for the import of cleaner and safer vehicles. These results are based on a desk study of data on export and fleet composition, and a physical inspection of vehicles destined for export in cooperation with the Netherlands Vehicle Authority (RDW). In the Netherlands, every year, more than half a million used passenger vehicles are decommissioned from use domestically; about half of these are disposed of through the End-of-Life Vehicle (ELV) pro- cess while the remainder are transported abroad. The study found that approximately 80,000 of these vehicles shipped abroad have a low emission standard (Euro 0, 1, 2, or 3) and are 16 years of age or older. More than a quarter of them end up in Africa. Libya, Nigeria, and Ghana import most of the used vehicles exported from the Netherlands. An esti- mated share of 40 percent of vehicles exported to African countries have foreign registries (mainly German). The United Nations Environment Programme (UNEP) has reported that the Economic Community of West African States (ECOWAS) has agreed as a bloc to adopt stricter environmen- tal regulations that would prohibit importation of more than 80 percent of these vehicles to the 15 member states. These vehicles are old and below the Euro 4 emission standard, and they often do not have a valid periodic roadworthiness certificate. Around 20 percent of tested petrol vehicles fail tests for emission requirements. Many of these export vehicles, therefore, are a cause for pollutant and climate emis- sions and less road safety in the recipient countries. The majority of used vehicles exported to African countries are between 16 and 20 years of age. In Morocco and Ghana, however, the mean age of light-duty vehicles (LDVs) from the Netherlands is 4.7 and 13.6 years, respectively. Shipping costs of vehicles exported to North and West Africa are the cheapest (in euro cents per kilo- gram) compared to other regions to which used vehicles from the Netherlands go. Libya and Nigeria receive very low-price vehicles. A quarter of the vehicles going to these countries in 2017 and 2018 had a price of below 50 euro cents per kilogram. The majority of exported vehicles to the top destinations in Africa have a mileage of more than 200,000 kilometers. Heavy-duty vehicles (HDVs) have higher mileage than LDVs. LDVs with high mile- age go to Nigeria, The Gambia, Sierra Leone, and Burkina Faso. The vehicles with relatively lower mile- age (a peak of just below 200,000 kilometers) go to Morocco, Ghana, and Ethiopia. 6 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Finally, this study shows that the quality of used cars exported to West Africa is quite similar to the quality of cars dismantled in the Netherlands. While a recycling fee has been paid for them in the Netherlands, only one out of three ends up in a recycling company to be dismantled under controlled conditions and with a high rate of reuse of material. Without a proper structure for disposal and treat- ment of ELVs in African countries, uncontrolled treatment of vehicles, when discarded, causes envi- ronmental harm and injuries to health and a risk of losing secondary raw materials. Source: World Bank based on Netherlands ILT (2020). From a development impact standpoint, the nature The global fleet of light-duty vehicles (LDVs) is pro- of a country’s motor vehicle stock and how it grows jected to double by 2050. More than 90 percent of affects three key and tangible outcomes, as will be this growth is projected to happen in non-OECD discussed and highlighted throughout this report countries. Notwithstanding the emphasis in recent (and elaborated upon in Boxes 3.2 to 3.4). First, the years on the potential for battery electric vehicles quality of the motor vehicle stock affects road safety (BEVs) to disrupt motor vehicle markets, forecasts outcomes—that is, the number of people killed or show that more than two billion new internal com- seriously injured in motor vehicle crashes. The charac- bustion engine (ICE) vehicles will be sold worldwide teristics of vehicles and their fitness or roadworthiness over the next 30 years, even under the most optimis- can affect fatality and serious injury outcomes. Indeed, tic scenarios for the electrification of new vehicles motor vehicles have been one of the key pillars of a (ICCT 2020). The speed with which developing coun- safe systems approach to road safety emphasized tries motorize can be considered both a challenge throughout the Road Safety Decade of Action (Abel, and an opportunity (see Box 1.3). While developing Lindley, and Paniati 2020), but probably received the countries are recipients of a large share of exported least attention in terms of official development assis- used vehicles (70 percent in 2018), the speed of tance (ODA) support. Second, the quality of the motor growth of the fleet means that those vehicles will be vehicle fleet affects air quality, particularly in cities. only a small proportion of the total vehicle fleet, even Not only are motor vehicles a key source of harmful if they remain in use for an excessively long period air pollution, including carbon monoxide (CO), fine of time compared to their use in the Global North. particulates (PM2.5), oxides of sulfur (SOx), and ozone Governments in many developing countries, partic- precursors (oxides of nitrogen and various hydrocar- ularly in Africa, therefore, have a window of oppor- bons), but the amount of those pollutants they give tunity now to effect motorization policies that can out is directly related to how the vehicle was built and shape their motor vehicle fleet for decades. Indeed, how well it is maintained. Finally, the profile of the evidence, such as the above-referenced Dutch study vehicle fleet—what is the size and weight of vehicles of the Port of Rotterdam, is showing that weak in the fleet, how big are the engines they use, what motorization policies have detrimental effects on kind of power control technology they use, and how vehicle stocks used in many low- and middle-income their manufacturers engineered the technology of countries. With the world transitioning to alternative the vehicle to balance power with efficiency—affects fuels and new vehicle technologies, like electric vehi- the (fossil) fuel consumption of the vehicle stock as a cles (EVs), additional challenges and opportunities whole, and, consequently, the greenhouse gas (GHG) arise for developing country markets. emissions profile of the road transport sector. 7 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Box 1.3. Rapid Urbanization and Modernization Rates in Africa Over the past two decades, Africa has been the fastest urbanizing region in the world, growing at 3.44 percent on average, which is much higher than the rate of other rapidly developing regions, such as Asia and Latin America. Given that Africa remains the least developed region in the world, the rapid pace of urban growth will likely accelerate motorization development and challenge the limited resource base to meet the demand of the continent’s growing urban populations. Africa hosts the smallest proportion of the world’s vehicle fleet (only 42.5 million in-use vehicles) with the lowest vehicle penetration rate (32 light-duty vehicles per 1,000 persons). The light-duty vehicle (LDV) fleet size in Africa is projected to grow significantly at more than 6.1 percent annually over the next few decades (EIA 2016). That means that by 2040, there will be nearly 137 million more LDVs in Africa than in 2015, a growth of nearly 400 percent, representing the compounding effects of a 67 percent growth in population, and a 183 percent growth in the number of vehicles per 1,000 persons. Most countries on the continent are primarily import-driven in their automotive industries, and only South Africa and Nigeria currently have vehicle emissions standards. In addition, a high percentage of imported vehicles are secondhand (85 percent in Ethiopia, 80 percent in Kenya, and 90 percent in Nigeria, in 2015) from Europe, Japan, and nearby countries, mainly because of the low capacity of local vehicle assembly and manufacturing and limited disposable income to purchase new vehicles that are burdened with high tariffs and other taxes. Source: World Bank. How to move from challenge to opportunity, however, such as the transition to EVs, raises challenges in has been elusive. Motor vehicle manufacturing (and developing countries due to the absence of support- even assembly) across Africa and in low- and mid- ing industries and charging infrastructure. dle-income countries in many other world regions is far behind that in upper-middle-income and high-in- The World Bank developed a Motorization come countries. In the developing world, particularly Management (MM) framework with the objective of lower-income countries, where purchasing power supporting client countries in the development of is low, secondhand vehicle importation is the main policies and measures aimed at managing vehicle source of vehicle stock growth and is likely to remain stocks in a proactive, phased, and systematic manner. so for many years or decades to come. International The MM framework reflects a series of policy consid- vehicle markets adapt to higher vehicle fuel econ- erations and programs that can be implemented to omy standards set in advanced economies, generat- improve the quality of fuels and of vehicles in a coun- ing benefits in developing countries with a time lag. try’s stock. However, dramatic changes in vehicle technologies, 8 MOBILITY AND TRANSPORT CONNECTIVITY SERIES MM is supportive of the World Bank’s twin goals of adaptation, as defined in their Nationally Determined ending extreme poverty and boosting shared pros- Contributions (NDCs) to the Paris Agreement under perity, fostering human development and building the United Nations Framework Convention on institutional capacity in client countries. It is closely Climate Change (UNFCCC). aligned with the visions of the Sustainable Mobility for All (SuM4All) initiative and of the Global Road This report presents the conceptual framework for Safety Facility (GRSF) that include universal access, MM, including a description of guiding consider- improved transport safety and efficiency, and ations, particularly those that strengthen policy effec- green mobility. Furthermore, MM provides a con- tiveness. It also proposes instruments to enhance ceptual framework supportive of client countries’ transparency in policy development processes. goals and targets for climate change mitigation and References Abel, Sarah, Jeffrey A. Lindley, and Jeffrey F. Paniati. 2020. “The Road to Zero: Taking a Safe System Approach.” ITE Journal 90 (5): 26–31. https://www.ite.org/ITEORG/assets/File/ITEJ%20Published/2020/ITE_ITE_May2020.pdf. EIA (US Energy Information Administration). 2016. International Energy Outlook 2016. Washington, DC: EIA. https://www.eia. gov/outlooks/ieo/pdf/0484(2016).pdf. ICCT (International Council on Clean Transportation). 2020. “Vision 2050: A Strategy to Decarbonize the Global Transport Sector by Mid-Century.” White Paper, ICCT, Washington, DC. https://theicct.org/publication/ vision-2050-a-strategy-to-decarbonize-the-global-transport-sector-by-mid-century/. Netherlands ILT (Human Environment and Transport Inspectorate). 2020. “Used Vehicles Exported to Africa: A Study on the Quality of Used Export Vehicles.” Den Haag: Human Environment and Transport Inspectorate, Netherlands Ministry of Infrastructure and Water Management. https://www.ilent.nl/documenten/rapporten/2020/10/26/ rapport--used-vehicles-exported-to-africa. UNEP (United Nations Environment Programme). 2020. Used Vehicles and the Environment: A Global Overview of Used Light Duty Vehicles—Flow, Scale and Regulation. Nairobi: UNEP. https://wedocs.unep.org/ handle/20.500.11822/34175;jsessionid=AA7213C7CAEA230566CFC0D8D042FBA6. 9 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY 2. Motorization in the Developing World 10 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Motorization As Technology Diffusion Fundamentally, motorization is a technology-diffu- convenience of using modal alternatives can influ- sion process, and, typical of such processes, follows ence where that saturation line ultimately is, and, a logistic distribution over time, as reflected in Figure consequently, the steepness of the steep part of the 2.1 below. curve. In addition, the recent emergence of digital and smart phone technology to make Mobility as a Vehicle adoption begins relatively slowly, but then Service (MaaS) more convenient and ubiquitous than progresses rapidly at the steepest point in the curve, in the past appears likely to lower the saturation before tapering off as the society approaches a point, at least for developed countries. hypothetical “saturation” level, which, in Figure 2.1, is identified around 600 cars per 1,000 persons, on the Understanding the logistic nature of motorization order of magnitude of North America. For example, processes is important from a policy standpoint. in 2016, Kenya had about 18 cars per 1,000 persons, Where on the curve a country is at any point in time and Ethiopia had six vehicles per 1,000 persons, will affect whether vehicles currently in use will com- placing them on the far-left side of the motorization prise a large or small proportion of the vehicle stock curve before the inflection point toward the steep five years from now. The implication is that the kinds slope. Academics have long debated whether there of policies and measures that might be appropriate is consistency among countries about the location at the lower end of the steep curve reflected in Figure of the saturation line, but it is likely that the policy 2.1 might be quite different from those that would be environment affecting land use and the costs and appropriate toward the upper end of that curve. figur Figure 2.1. Motorization Process as Technology Diffusion Motorization is a technology-diffusion process Motorization Rate Saturation Level Midpoint 600 500 Vehicles per 1,000 persons 400 300 200 100 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 Year Source: Original figure produced for this publication. figur 11 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY The State of Motorization Globally This section provides an overview of the data and reaching 2,020 million in 2018, or an average growth information available on motorization, using pri- rate of 4.1 percent per year.1 The global motorization marily data from the World Road Statistics (WRS), rate in 2018 was 266 motor vehicles per 1,000 per- produced by the International Road Federation (IRF). sons, but actual motorization, not surprisingly, varies WRS data are used because of the breadth of years substantially by region. The median motorization rate for which the data are available; we have not done an in North America in 2018 was 657, while that of Sub- extensive comparison among the datasets available, Saharan Africa was just over 20. (Comparative graphs which include the International Organization of Motor of motorization rates by region are shown in appen- Vehicles Manufacturers (Organisation Internationale dix A.) The largest growth in vehicle numbers in the des Constructeurs d’Automobiles, OICA), the first two decades of the present century was experi- International Energy Agency Mobility Model (IEA enced in East Asia and the Pacific region, where the MoMo), and the Global Status Report on Road Safety. number of vehicles increased by 436 million vehicles Some comparative calculations of the WRS data with (from 254 million to 690 million) between 2000 and other global compilations of worldwide motorization 2018. Median motorization rates in that region were are presented in appendix A. 158 vehicles per 1,000 persons in 2018. The South Asia region experienced the second-largest increase Trends in worldwide motorization in vehicle numbers at 201 million vehicles within that same period, with a median motorization rate of 29 In 2000, 960 million vehicles were in use world- vehicles per 1,000 persons in 2018 (see Figure 2.2). wide. This number has steadily increased over time, In terms of growth rate between 2000 and 2018, the Figure 2.2. Number of Vehicles in Use by Region between 2000 and 2018 2,500 No. of four-wheelers + motorcycles 2,000 1,500 (Millions) 1,000 500 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 East Asia & Pacific Europe & Central Asia Latin America & Caribbean Middle East & North Africa North America South Asia Sub-Saharan Africa Source: World Road Statistics. 1 These numbers include passenger cars, buses and motor coaches, vans, pickups, lorries, road tractors, and motorcycles 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 12 East Asia & Pacific Europe & Central Asia Latin America & Caribbean Middle East & MOBILITY AND TRANSPORT North Africa CONNECTIVITY SERIES North America South Asia Sub-Saharan Africa South Asia region had the largest growth rate at 9.5 and Pacific region at 5.7 percent per year, and Sub- percent per year, followed by the Latin America and Saharan Africa at 5.6 percent per year (see Figure 2.3). Caribbean region at 6.4 percent per year, the East Asia Figure 2.3. Change in the Number of All Types of Vehicles in Use between 2000 and 2018 <1.5 times >1.5 times >5 times 10> times No data Powered by Bing © Australian Bureau of Statistics, GeoNames, Microsoft, Navinfo, TomTom, Wikipedia Source: World Road Statistics. 13 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Proportion and Trends by Vehicle Types Globally, passenger cars accounted for the larg- 2.9 times, which was higher than the growth rate of est share of vehicles in use, at 65 percent in 2018. passenger cars, which was 1.9 times. The East Asia Motorcycles and mopeds accounted for the sec- and Pacific region experienced the largest increase ond-largest share, at 23 percent. Together, they in actual numbers of passenger cars in use from 97 accounted for 88 percent of the total vehicles in use million in 2000 to 340 million in 2018. The South Asia in 2018 (see Figure 2.4). region experienced the largest increase in motor- cycle numbers from 38 million to 299 million within Trends in the numbers of in-use vehicles have shown the same period. South Asia experienced the highest a steady increase, with the number of passenger growth rates for both passenger and motorcycles cars and motorcycles at 582 million and 202 million, at 4.8 and 5.3 times, respectively, between 2000 and respectively, in 2000, reaching 1,126 million and 2018. The Latin America and Caribbean region also 595 million, respectively, in 2018. The growth rate experienced a high growth rate for motorcycles, at of motorcycles in use between 2000 and 2018 was 6.1 times during the same period (see Figure 2.5). Figure 2.4. Proportion of Vehicle Types in Use in the World in 2018 Lorries and road Buses and motor tractors in use, coaches in use, 3% 1% Vans and pickups in use, 8% Motorcycles and mopeds in use, 23% Passenger cars in use, 65% Source: World Road Statistics. 14 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Figure 2.5. Number of Passenger Cars and Motorcycles in Use by Region between 2000 and 2018 East Asia & Pacific Europe & Central Asia Latin America & Caribbean Middle East & North Africa North America South Asia Sub-Saharan Africa 1,200 1,200 No. of motorcycles (Millions) No. of passengers (Millions) 1,000 1,000 800 800 600 600 400 400 200 200 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: World Road Statistics. Trends of Passenger Cars by Income Level and Region Between 2000 and 2018, upper-middle-income coun- On the other hand, the number of motorcycles in use tries and lower-middle-income countries experienced soared in lower-middle-income countries by 295 mil- high growth rates for passenger cars in use, at 4.0 lion, from 77 million to 372 million, between 2000 and times and 3.3 times, respectively. The number of pas- 2018. Low-income countries experienced the highest senger cars in use surged in upper-middle-income growth rate for motorcycles in use, at 6.0 times, fol- countries by 310 million from 103 million to 413 mil- lowed by lower-middle-income countries at 4.8 times lion within the same period. (see Figure 2.6). 15 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Figure 2.6. Number of Passenger Cars and Motorcycles in Use by Income Level between 2000 and 2018 1,200 1,200 1,200 1,200 No. of passenger cars (Millions) (Millions) 1,000 1,000 No. of passenger cars (Millions) (Millions) 1,000 1,000 800 800 800 800 motorcycles ofmotorcycles 600 600 600 600 400 400 400 400 No. of 200 200 No. 200 200 0 0 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: World Road Statistics. Correlation between the number of vehicles and GDP There is a relationship between the number of vehicles in use and income (Peden et al. 2004). Data from 172 countries, including low- and middle-income countries, for the period between 2000 and 2019, confirm that there is a moderately strong relationship between the number of vehicles in use and GDP per capita (see figure 2.7). Figure 2.7. Number of Vehicles versus GDP per Capita All types of vehicles 1400 No. of vehicles per 1,000 population 1200 All types of vehicles 1400 No. of vehicles per 1,000 population 1000 1200 800 1000 600 y = 148.3ln(x) - 1047 800 400 R² = 0.6259 600 200 y = 148.3ln(x) - 1047 400 0 R² = 0.6259 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 200 GDP per capita (current US$) 0 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 GDP per capita (current US$) Source: World Bank based on World Road Statistics data. 16 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Trends in vehicle imports and exports The number of first registration and production of vehicles increased over time, and exports and imports of vehicles peaked in 2013 and then remained flat in low- and middle-income countries (see Figure 2.8). Figure 2.8. Trends in the Number of First Registration, Production, Import, and Export of Vehicles, Excluding Motorcycles 60 50 No. of vehicles (excluding motorcycles) (Millions) 40 30 20 10 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 First registration Production Import Export Source: World Road Statistics. Note: Trends shown for low- and middle-income countries only. In 2018, low- and middle-income countries had a higher number of first registrations, with 48,964 vehicles, and production, with 51,503 vehicles, compared to 29,815 first registrations and 45,925 vehicles produced in high-income countries that same year. In low- and middle-income countries, imports of used vehicles accounted for about 16 percent of total imports, while exports of used vehicles accounted for about 3 percent of total exports (see Table 2.1). 17 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Table 2.1. The Number of Production, Export, Import, and First Registration of Vehicles in 2018 Income level Low- and middle- Total Low Lower middle Upper middle High income countries First registration 168 7,180 41,617 29,815 48,964 78,779 Production 0 8,866 42,637 45,925 51,503 97,429 New Import No data 67 2,611 2,463 2,678 5,141 Used Import No data 9 559 633 568 1,201 Total Import 11 202 3,316 5,223 3,529 8,752 New Export 0 No data 2,874 9,903 2,874 12,776 Used Export 0 No data 88 66 88 154 Total Export 0 5 2,983 10,549 2,988 13,538 Source: World Road Statistics. Note: Data are presented in thousands. Figure 2.9. Overview of Number of First Registration, Production, Import, and Export of Vehicles, in 2018, by Country Source: World Road Statistics. Note: Figure excludes data for motorcycles. 18 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Traffic volumes Traffic volumes worldwide spiked in 2007, decreased until 2009, but have been gradually increasing since then. However, it was only possible to analyze data for 96 countries, and there is a possibility of data imperfec- tions (see Figure 2.10). fig Figure 2.10. Traffic Volumes by Region between 2000 and 2018 10000 Vehicle-Km, Annual (Billions) 8000 6000 4000 2000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 East Asia & Pacific Europe & Central Asia Latin America & Caribbean Middle East & North Africa North America South Asia Sub-Saharan Africa Source: World Road Statistics. References Peden, Margie, Richard Scurfield, David Sleet, Dinesh Mohan, Adnan A. Hyder, Eva Jarawan, and Colin Mathers, eds. 2004. World Report on Road Traffic Injury Prevention. Geneva: World Health Organization. https://www.who.int/publications/i/ item/world-report-on-road-traffic-injury-prevention. 19 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY 3. Motorization Management in the Sustainable Transport Agenda 20 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Definition of Motorization Management At its most basic level, Motorization Management parts, and materials linking to the overall vehicle (MM) is a deliberate, diligent, and coordinated pro- life cycle, from the vehicle design, production, and cess to shape, through public policies and programs, post-production phases until scrappage. the profile, quality, and, to some degree, quantity and intensity of use of the motor vehicle stock as it Like other key themes affecting sustainable transport progresses through a country’s motorization pro- outcomes, such as road safety, asset management, cess. MM seeks to shape the way motor vehicles or gender inclusion, MM is not concerned only with are managed throughout their effective in-use life policies per se, but rather the entire governance in a given country in order to improve safety, envi- ecosystem that gives rise to desirable policy out- ronmental, and fuel consumption outcomes. This comes affected by the evolution of a country’s vehicle life-of-vehicle approach means targeting policies and stock.1 Developing the right policies, to be sure, is an measures at different phases of vehicle life, includ- important aspect of MM, but so is the development ing vehicle entry, active use, and vehicle exit, and and strengthening of institutions to carry out pol- the conditions that underlie demand for motoriza- icy analysis, to ensure compliance, and to manage tion. Because meeting some of these objectives also stakeholders and communications, to name a few. requires improvements in fuel quality and availability MM policies will also affect government revenues and in certain cases, MM necessitates consideration of expenditures, and these impacts also fall within the fuels and vehicles as a system. MM also looks at the purview of MM. important aspects of reuse and recycling of vehicles, Motorization Management in the Policy Context MM is one aspect of sustainable transport, focused how far they choose to or need to travel by motor- specifically on the vehicles themselves; it is useful ized means); (2) the provision of transport mode to understand how MM fits into broader sustain- alternatives, mode integration, and incentives such able transport policy. Over the past 20 years, a con- that people and goods transport shift to vehicles sensus has emerged among sustainable transport and modes that are able to move them more effi- practitioners that the conceptual framework known ciently; and (3) the optimization of the vehicles, fuels, as “Avoid-Shift-Improve” (ASI) broadly reflects the transport infrastructure, and operational systems priorities and objectives of sustainable transport to improve environmental and safety performance. (Dalkmann et al. 2014). ASI is sometimes defined A comprehensive sustainable transport policy will slightly differently, but as used here, it refers to: seek improvements in A, S, and I components across (1) the need to plan cities, neighborhoods, production different scales—urban, rural, national, and interna- and consumption processes, and transport and logis- tional. MM addresses specifically the vehicle compo- tical services to avoid unnecessary use of motorized nent of the I aspect of ASI.2 Examples of the kinds of vehicles (where “use” in this context refers not only policies that an MM framework facilitates are shown to whether people use motorized vehicles, but also in Box 3.1. 1 In this report, we refer to vehicle “fleet” as being the set of vehicles under the control of an identifiable agent, whether that be a natural person, a company, or a government. We refer to vehicle “stock” as the set of vehicles (separately or in fleets) that are in use in a given country. 2 It should be noted that there is also an important infrastructure management element to I under ASI that falls under the rubric of “Traffic Management” and is not generally considered under “Motorization Management.” 21 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Box 3.1. What Kinds of Policies Are Made Possible through Motorization Management? Motorization Management (MM) asks governments to look beyond individual policies that may be recommended as “best practice” to understand what kinds of policies are really practicable in the country at a given time, and toward what goals? But, if effectively implemented, it can help countries to develop, adopt, and enforce motorization policies that can make a tangible difference toward sus- tainable economic development. Examples of policies whose implementation is enabled through this framework are: • Requirements for motor vehicles to meet certain pollutant emissions standards • Requirements for automotive fuels used in internal combustion engine (ICE) motor vehicles to meet certain quality specifications • Requirements for motor vehicles to have certain crashworthiness configurations, such as crumple zones, airbags, seat belt and infant car seat anchorages, etc. • Requirements for motor vehicles to meet fitness or roadworthiness standards, such as working brakes, minimum tire tread size, line-of-sight protection, etc. • Feebates or similar programs that provide fiscal incentives for use of less fuel-intensive vehicles • Assignment of carbon caps to specific motor vehicles, for example, in the context of regulatory or market-based climate mitigation measures MM, then, is an enabler that allows countries to implement effective governance policies. But an effective MM framework can also help countries more effectively implement aggressive actions to influence the fuel intensity of vehicles and/or the extent of vehicle use, both of which will influ- ence the carbon footprint of road transport. Fuel intensity can be influenced by using taxes or tariff rates to incentivize consumers to choose less fuel-intensive vehicles over more fuel-intensive ones. A revenue neutral way of creating such incentives is the use of “feebates” whereby an equilibrium point for a policy outcome (like fuel economy or CO2 emissions per vehicle kilometer) is selected, and vehicles which underperform the equilibrium point have to pay an additional fee on the tax or tariff, while those which outperform the equilibrium point receive a tax or tariff rebate. The equilibrium point itself is continuously adjusted and made more stringent as the fleet composition changes in response to the policy. MM facilitates the use of feebates by creating the mechanisms not only for ex ante policy formulation and ex post policy evaluation and revision, but also for the assignment of performance characteristics to each and every vehicle. Mauritius, for example, had to abandon its efforts to use feebates in 2016 precisely because it lacked the information infrastructure and institu- tional setup to adjust equilibrium points and assign performance rating to individual vehicles vis-à- vis the equilibrium point. 22 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Decarbonization of transport may also involve efforts to limit vehicle use, in addition to vehicle fuel intensity. As discussed earlier in this paper, reducing the overall amount of vehicle travel is a key decarbonization objective under an Avoid-Shift-Improve (ASI) framework, that is, as a function of the Avoid and Shift aspects of a sustainable transport policy writ large. But MM can also help to Improve the performance characteristics of the vehicle stock by limiting per-vehicle use, thereby encouraging fleet turnover. There are two ways MM might support stock turnover. First, MM can facilitate acceler- ated vehicle retirement (scrappage) programs. That is, policies might channel (or enhance) incentives for purchase of vehicles with low fuel intensity toward owners who demonstrate that this purchase replaces an existing vehicle and the vehicle being replaced is destroyed, not resold. (Such policies should also be designed to ensure that public funds are used to incentivize destruction of highly energy intensive vehicles sooner than they otherwise would have been in the absence of the policy, rather than simply pay for the destruction of vehicles that would have been destroyed anyway.) In other words, the policy would be intended to ensure that vehicle kilometers travelled (VKT) by less fuel-intensive vehicles replaces VKT by more fuel-intensive ones. Such a measure would have global greenhouse gas (GHG) accounting implications: used vehicles taken out of service in a country of first market and exported to low- and middle-income countries (for example, under a policy to encourage electrification of the fleet) could only be said to be reducing CO2 emissions if they replace, rather than displace, a more fuel-intensive vehicle in the importing country. A second way MM could help encourage fleet turnover in the long run is by establishing and enforcing per vehicle usage limits at the time of vehicle entry (certification/homologation) into the national vehi- cle stock. China, for example, assigns both age and odometer limits to ICE vehicles, beyond which those vehicles may not be registered for use on public roads. The premise behind such age and/or odometer limits is that at any point in time, all else equal and on average, younger vehicles should be less fuel intensive than older ones because of a combination of the technology used and less wear and tear. Finally, incentives for vehicle fuel intensity reduction and limitations on per vehicle use to keep the fleet renewing can be mutually reinforced by using a per vehicle lifetime CO2 emissions cap. Under such an MM approach, the policy might assign a CO2 emissions “cap” to each vehicle of a certain class. At import, the vehicle would be assigned a fuel intensity rating based on preset criteria (as might happen say in the context of a feebate program), and then its lifetime permitted VKT in the country would be set based on the assigned fuel intensity and the cap for the vehicle class. The MM framework institutions would permit tracking of the vehicle’s VKT through periodic technical inspection (PTI) odometer checks; it would automatically be classified as an End-of-Life Vehicle (ELV) once the vehicle reaches its VKT cap. Such a measure would incentivize purchasers to select the least fuel-intensive vehicle in the given class in order to have more permitted VKT. Such caps might eventually be incorporated into a market-based or other program in which the cap could be extended through the purchase of allowances. Source: World Bank. 23 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY MM should be understood as a component of the ASI • Making the stock of vehicles in use cleaner by framework. It is best implemented in the context of minimizing tailpipe emissions and other toxic and sustainable transport policy informed broadly by an noxious effluents (including noise). This requires ASI approach; as such, a key tenet of MM should be consideration of fuel quality and availability as that in the drive to improve motor vehicles and fuels, part of the policy objective (see Box 3.3). those efforts must not undermine policy efforts to avoid the need for motorized travel or shift the vehi- • Making the stock of vehicles being used more cles or modes by which they occur. An example of fuel efficient—that is, minimizing the amount of this undermining might be if efforts to improve vehi- energy (especially, but not only, fossil fuel energy) cles used in public transport make the cost of deliv- needed to power the vehicle stock. Depending ering public transport services too costly for people on the level of ambition, this may require consid- to afford, and public transport mode share drops as eration of fuel type and availability as part of the a result. policy objective. Fuel-efficient vehicles reduce both user fuel costs and emissions of CO2, thereby gen- Within the context of addressing the motor vehicle erating financial and climate benefits (see Box 3.4). component of Improve, MM is generally concerned with the following five key policy outcomes aligned to • Influencing the size and/or composition of the the development agenda: vehicle stock to be in line with sustainable devel- opment objectives. Some countries may articulate • Making the stock of vehicles in use safer by mini- a vision of the level of motorization they wish to mizing motor-vehicle-related fatalities and serious target, for example, in order to spend infrastruc- injuries associated with substandard vehicles and ture resources efficiently (see Box 3.5). poor maintenance practices. Vehicle safety gen- erally refers to crash avoidance characteristics of • Ensuring continuity of fiscal resources—managing vehicles—whether they are properly maintained the fiscal impact accompanying the motorization with functioning brakes, headlights, taillights, process (see Box 3.6). etc., and whether they are fitted with advanced crash avoidance technology such as Electronic These policy outcomes may be complementary in Stability Control—and crashworthiness character- some instances and involve trade-offs in others. istics, such as whether they are fitted with proper Different countries might balance these trade-offs restraint anchorages or airbags, or whether they differently. have ample crumple zone protection for passen- gers in the event of a crash (see Box 3.2). 24 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Box 3.2. Road Safety Dimensions of Motorization Management Motorization Management (MM) measures can help improve the safety characteristics of motor vehicles. Safe vehicles are regularly identified as a key element of the safe systems approach to road safety, along with safe infrastructure, safe speeds, effective road safety institutions, and post-crash care. “Safe vehicles” refers to both configuration and fitness. Configuration relates to the way the vehi- cle has been designed, including whether it is fitted with seat belt anchorages, front and side airbags, adequate child-restraint systems, adequate front crumple zones, structural design to avoid rollovers, pedestrian contact height, advanced crash avoidance features like electronic stability control, and other aspects. “Fitness” refers to how the vehicle is being maintained, such as whether key features, including brakes, lights, and turn signals, are in functional order; whether tire treads are substantially worn down; whether the vehicle has been altered in a way that inhibits sight lines or passenger safety in the event of a crash; or whether there are any other hazardous conditions on the vehicle. The World Health Organization (WHO) estimates that about 1.35 million people die each year as a result of road traffic crashes. Road traffic injuries are the leading cause of death for children and young adults aged 5 to 29 years. Ninety-three percent of fatalities occur in low- and middle-income countries, even though only about 60 percent of the world’s vehicle stock is located in these countries (WHO 2018). James et al. (2020) have estimated that nine of the 10 countries with the highest proba- bility of death from road crash injuries are low- and middle-income countries. One indicator to mea- sure this probability is the Vehicle Killing Potential (VKP). VKP measures the number of traffic fatalities per 1,000 vehicles. It is useful to help evaluate differ- ences across low- and middle-income countries and fatality estimates and constitutes a more direct metric for assessing vehicle policy than the more epidemiological-focused fatalities per capita. Figure B3.2.1 shows VKP for all low- and middle-income countries, ranked from highest to lowest using the GBD fatality estimate. GBD is considered more accurate because it is based on a review of fatality records using a consistent approach across countries. VKP estimates range from 0.17 deaths per 1,000 vehicles in Croatia to 92.6 deaths per 1,000 vehicles for Central African Republic—nearly one fatality per 10 vehicles. Other countries are highlighted in figure B3.2.1. For each country, correspond- ing VKP values based WHO fatality estimates (based on statistical model, not actual observations in a country) and fatalities reported within each country are also shown in figure B3.2.1.) 25 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Figure B3.2.1. Vehicle Killing Potential Metric for Low- and Middle-Income Countries Based on Three Fatality Estimates 100 Central African Republic Angola 10 Uganda El Salvador India Thailand Russia 1 Argentina Croatia 0.1 0.01 Average of VKP_Reported Average of VKP_GBD Average of VKP_WHO Source: World Bank calculations based on source data. At present, road safety data do not allow for a rapid assessment of the relative responsibility of vehi- cle factors in the observed fatalities from road traffic crashes. One study in China used factor analysis to calculate that vehicle condition was the third most important factor in road traffic fatalities, after driver error and driver experience. “Purpose of vehicle,” which is not defined in the study, but might reflect the vehicle size and configuration, was found to be the fourth most important factor (Chen, Zhang, and Xu 2016). Source: World Bank. 26 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Box 3.3. Air Pollution Dimensions of Motorization Management Motorization Management (MM) measures can help reduce the contribution of motor vehicles to ambient air pollution. Ambient air pollution is a factor in strokes (24 percent), chronic heart disease (25 percent), COPD (43 percent), lung cancer (29 percent), acute lower respiratory infection (17 per- cent), diabetes, and other diseases (IQAir 2020). It is the fourth-highest leading health risk factor for death, contributing to 3.75 million premature deaths in 2019, and seventh-highest risk factor for Disability Adjusted Life Years (DALYs), contributing between 10 percent and 12.5 percent of DALYs in many parts of Sub-Saharan Africa and Asia (Murray et al. 2020). The two key index pollutants that researchers use to gauge health effects are ambient fine particle concentrations (PM2.5) and ambient ozone (O3) concentrations. The World Health Organization (WHO) establishes guidelines for maximum concentrations as shown in the following table. Table 3.3.1. World Health Organization Guidelines for Ambient Air Quality Concentrations for Particulate Matter and Ozone 10 mg/m3 annual mean PM2.5 25 mg/m3 24-hour mean O3 100 mg/m3 8-hour mean Source: Source: World Health Organization. Note: PM2.5 = fine particulate matter with a diameter of 2.5 micrometers or less; O3 = ambient ozone; mg/m3 = milligram per square meter. WHO has estimated that 91 percent of the world’s population lives in places that exceed these limits. A report in 2020 surveying air quality monitoring data from 2019 identified the proportion of cities by world region that met the WHO guideline for annual mean concentrations of PM2.5 (IQAir 2020). Table 3.3.2. Compliance with WHO Ambient Air Quality Guidelines for Annual Mean PM2.5 Concentrations Region Percent of cities meeting WHO annual mean PM2.5 guideline East Asia 16.9 Southeast Asia 3.2 Central & South Asia 0.7 Western Asia 0 Europe 36.4 North America 80.5 Latin America & Caribbean 14.5 Africa 13.7 Oceania 79.1 Source: IQAir (2020) based on cities where air quality monitoring data are available. 27 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Motor vehicles used in transport are a significant source of pollutants. PM2.5 are produced in both gas- oline and diesel-powered internal combustion engines (ICEs), though diesel engines produce PM2.5 in much higher amounts, in terms of both mass and number. O3 is formed in the troposphere through complex chemical reactions, reactions highly dependent, among other factors, on concentrations of non-methane hydrocarbons (NMHCs) and oxides of nitrogen (NOx) in the atmosphere. Gasoline vehi- cles are a major source of NMHCs, while diesel vehicles are a major source of NOx. The International Council for Clean Transportation (ICCT) has estimated the relative contribution of transport-related tailpipe emissions associated with O3 and PM2.5 to deaths at a global level (Anenberg et al. 2019). The researchers found that, in 2015, 11.4 percent of ambient air pollution deaths were attributable to tailpipe emissions from mobile sources, amounting to a global welfare loss of US$976 billion. In terms of death and economic loss from death, PM2.5 was substantially more impactful than O3 by a factor of more than 10; PM2.5 accounted for 91 percent of the total welfare loss from tailpipe emissions calculated. The researchers also calculated a transport attributable portion of air pollu- tion deaths for the top 100 metropolitan areas. The data provided do not permit reporting a popula- tion-weighted average for these metropolitan areas, but the median value is 14.9 percent. It should be noted that tailpipe emissions are not the only way that transport contributes to pollution. Evaporative emissions associated with refueling and hot soak of gasoline vehicles are an important source of NMHCs. Resuspension of road dust and brake and tire wear also contribute particulate mat- ter to ambient concentrations. MM measures, however, would mostly target emissions from tailpipe exhaust. Fuel specification plays an important role in motor vehicle pollution outcomes, so is an integral part of MM. Sulfur concentrations in fuels greater than 50 parts per million (ppm) progressively degrade the effectiveness of Euro IV/4 technology with concentrations greater than 500 ppm rendering them inef- fective. For more stringent Euro emissions control technology, even more restricted levels of sulfur (generally less than 10 ppm) are required. NOx control in Euro VI equivalent vehicles requires the avail- ability of urea (such as Adblue). Lead has largely been removed from gasoline supply streams around the world, but other anti-knocking additives, such as methylcyclopentadienyl manganese tricarbonyl (MMT), continue to be used in many parts of the world. Manganese, like lead, can inhibit the function- ing of emissions control equipment and is a neurotoxin. The ability to ensure the availability, distribu- tion, and integrity of high-quality fuels, therefore, is an important aspect of MM. Source: World Bank. 28 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Box 3.4. Climate Change Dimensions of Motorization Management Motorization Management (MM) measures can help advance the decarbonization objectives of a country. In the road transport sector, greenhouse gas (GHG) emissions are overwhelmingly domi- nated by carbon dioxide (CO2) emissions from the fleet as it is being used. In-use CO2 emissions are directly proportional to fossil fuel consumption, which in turn depends on three factors: fuel inten- sity of the vehicles used, how far they are driven, and the conditions under which they are operated. Comprehensive sustainable transport policies, particularly those that have an emphasis on decar- bonization, can affect all of these factors, but do so differently. The table below shows how different elements of transport policy can affect CO2 emissions. Table 3.4.1. Motorization Management and Other Policy Approaches to Influence Decarbonization Pathways in Transport Factor affecting CO2 CO2/fuel Motorization Demand management/pric- Traffic Infrastructure emissions tax Management ing/land-use/incentivizing management quality alternatives Fuel intensity of the vehicles   How far vehicles driven    * * What conditions are they driven under   * potentially via induced travel Source: World Bank. MM can influence the fuel intensity of the vehicles and how far they are driven. These will be addressed in turn. Average road transport fleet fuel economy in low- and middle-income countries is challenging to determine for many of the challenges that are discussed in this report. International Energy Agency (IEA) data show that new light-duty vehicles (LDVs) in countries that are not members of the Organisation for Economic Co-operation and Development (OECD) as a whole are, on average, 10 percent more fuel intensive than in OECD countries (7.3 liters per 100 kilometers in non-OECD coun- tries in 2020, compared to 6.6 liters per 100 kilometers for OECD countries). Furthermore, the rate of decline in new vehicle fuel intensity has been over twice as steep in OECD countries as in non-OECD countries. In 2005, average new LDV fuel intensity in non-OECD countries was 6 percent lower than in OECD countries. The likely explanation is that new cars/LDVs in non-OECD countries have been get- ting bigger and heavier. What internationally available data do not currently permit is a clear picture of the effect of the secondhand vehicle trade on GHG emissions globally, and within the low- and mid- dle-income recipient countries. 29 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Figure 3.4.1. Euro Emission Standards and CO2 Intensity Reduction Source: World Bank calculations based on data from the European Environment Agency, https://www.eea.europa.eu/data-and-maps/figures/fuel-efficiency-and-fuel-consumption. An MM program focused exclusively on improving vehicle safety features and pollutant emissions— that is, one that does not specifically have a climate or decarbonization orientation—might have marginal benefits for reducing CO2 emissions by reducing the fossil fuel intensity of vehicles in import- ant, but limited, ways. For example, in some countries with particularly old vehicles still in use, MM measures might constrain the continued use of carbureted internal combustion engine (ICE) vehicles, which remains fairly prevalent in many low- and middle-income countries, and promote adoption of fuel injection technology, which, all else equal, would reduce fuel intensity. In addition, the mea- sures might limit the use of poorly maintained vehicles whose fuel economy has been compromised because of accident, wear and tear, and/or poor maintenance.a These potential impacts have not yet been evaluated quantitatively, though efforts are underway to do so. Finally, because emissions stan- dards in OECD producer countries have been improving at the same time that average fleet fuel econ- omy performance has also been improving, particularly for LDVs, on average, there is a fuel intensity and per kilometer CO2 emission reduction associated with improvements in emissions standards. This relationship with respect to European Union (EU) standards, for example, is shown in Figure B3.4.1. That said, in order to have a meaningful effect on speed of decarbonization in developing countries, MM programs should incorporate measures specifically intended to reduce the fuel intensity of newly added ICE vehicles and accelerate the transition toward alternative fuel/traction vehicles. To be sure, technology is improving over time such that, all else equal, newer vehicles should be less fuel inten- sive than older ones, so one would expect that fleet modernization in and of itself would lead to less fuel-intensive vehicle stock. Examples of such technology innovations include: • Use of hybrid electric technologies to reduce fossil fuel consumption • Use of advanced transmission technologies, such as continuously variable transmission (CVT), to reduce engine load • Use of lightweight materials in chassis and body construction. a For example, on typical used vehicles entering low- and middle-income countries today, performing basic maintenance such as engine tune-ups, tire pressure checks, and replacing a failing oxygen sensor (a key emissions and fuel economy component in modern cars) can affect overall fuel economy by between 5 percent and 40 percent. 30 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Unfortunately, fuel intensity is not always purely a factor of just technology. It depends highly on a range of other factors dependent on consumer choice, such as: • Size/weight of the vehicles selected by consumers; • Choice of aerodynamic design (for LDVs) or the use of fittings to improve aerodynamic operation (for HDVs), which, in turn, is often subject to consumer taste or limited by information; and • Vehicle marketing strategies by original equipment manufacturers (OEMs), which may optimize power over efficiency in the application of particular technologies. In the case of low- and middle-income countries that are highly dependent on secondhand vehicle imports, the extent to which consumers can actively select these characteristics versus the extent to which their choices are already limited by consumer preferences in the primary market sometime in the past is unclear. Nevertheless, providing better information about vehicles and their expected life- time fuel intensity, smart fiscal policies, and financial incentives to consumers, suppliers, and financial intermediaries can help shape characteristics of consumer preferences giving rise to the overall fuel intensity of the in-use stock. The need for such concerted measures cannot be overstated. For example, India has a relatively aggressive policy for reducing new car fleet fuel intensity compared to other low- and middle-income countries. Even so, the IEA has calculated that India’s energy demand in the road transport sector will more than double between 2019 and 2040, and that most of that increase in energy demand will come from conventional gasoline and diesel. Figure 3.4.2. Changes in Road Transport Energy Demand by Fuel in India in the Stated Policies Scenario, 2019–40 Source: IEA 2021. 31 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY To make an impact on transport decarbonization, therefore, MM programs should include measures to incentivize sharp reductions in fuel intensity of ICE vehicles and transitions away from their use, and these measures should be as aggressive as possible. Tax, tariff, or financial incentives could be provided for the purchase of more fuel-efficient vehicles, or to incentivize purchase of electric vehi- cles (EVs). These incentives would need to be developed so as not to distort vehicle markets toward heavier LDVs (for example, sport utility vehicles or pickup trucks) over lighter ones (for example, sedans). These are discussed in more detail under the “Strengthen Market Mechanisms for Funding and Managing Vehicle Stock Growth and Turnover” section in chapter 4. It is important to note that any measures which reduce vehicle fuel intensity also help to reduce hard currency losses associated with fossil fuel purchases, so there are macroeconomic benefits for the country in addition to climate benefits for the planet. These dual benefits to macroeconomic and cli- mate objectives from decreased motor vehicle stock fuel intensity are, however, subject to take-back or rebound effects; all else equal, reduced cost of driving associated with fuel intensity reductions is correlated with increased vehicle kilometers traveled (VKT) per vehicle because of income and substi- tution effects. [See Gillingham (2018) for a good summary of recent (US-based) literature on rebound effect.] For this reason, we advocate throughout this paper that an MM framework should be con- ceived as part of (not a substitute for) a broader sustainable transport strategy. In addition to reducing CO2 emissions from the vehicle fleet as it is being used, MM measures can also reduce emissions of other substances that contribute to radiative forcing. These substances include black carbon, hydrofluorocarbons (HFCs), and methane (CH4). Black carbon refers to the carbona- ceous core of particulate emissions (for example, PM2.5), which has a highly variable effect on radia- tive forcing depending on where in the world it is present but is associated with a Global Warming Potential (GWP) of 350–400 in the GAINS model (GAINS IIASA). Any MM measures that help reduce PM2.5 emissions, therefore, would help reduce this radiative forcing. HFCs are used extensively in refrigeration and air conditioning applications in road transport. Risk of HFC emissions from road transport is high because of mishandling by poorly trained personnel in the vehicle maintenance and repair sector (Rodríguez, Carriel, and Gavilanes 2012), and in the case of fugitive emissions following traffic crashes. Because the GWP of HFCs is extremely high (between 53 and 15,000), a small amount of emissions can result in very high CO2eq. Finally, risk of CH4 emissions is high where compressed natural gas (CNG) is used in the transport sector. Risks of emissions are associated with fugitive gases not only in the upstream delivery and distribution system, but also in the compression process. Source: World Bank. 32 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Box 3.5. Motorization Management to Support Sustainable Development and Sustainable Lifestyles Motorization Management (MM) as a set of policy tools can help countries to not only address air quality, road safety, or fossil fuel consumption reduction goals, but also to support other sustainable development objectives, such as fostering healthy lifestyles, or reducing infrastructure investment bur- dens. Indeed, three facets of development are highly interdependent: the amount of land-space and infrastructure investment needed to meet motor vehicle “demand,” the extent to which populations perceive themselves as being “dependent” on motor vehicles to attain a certain basic or desired level of accessibility expected for a given level of development or prosperity, and the extent of motor vehi- cle penetration at the “saturation” point. How these factors play out in a given country will influence how “elastic” is the demand for private, motorized transport (that is, how easily travelers can be coaxed to switch to collective transport or active mobility), and how much investment in infrastructure will be required to maintain a given level of accessibility. For many countries, however, extrapolation of past rates of growth of vehicle ownership and usage implies an unsustainable and unfathomable level of investment in the future—in road and parking infrastructure—were that growth rate to be maintained. An often unstated but very common assumption underlying motorization policy is that motorization is inevitable, and that the role of public policy is to facilitate it in the interest of enhancing economic growth. To suggest that public policy could or should be used to restrain motorization may even be considered heretical in the political culture of many countries around the world. But, as discussed in chapter 2 in the section on “Motorization As Technology Diffusion,” while the process of motorization may follow the same logistic distribution across different societies, the ultimate level of saturation to which the system tends can be very different, depending on different transportation, land-use, and urban development policies of different countries and regions. Public policies can be used to influ- ence and reduce the saturation level of motorization, and MM might play a role in contributing to such efforts. Before enumerating the ways that MM might play such a role, it is important to emphasize that if the objective is to head off the growth of the motor vehicle stock to be within some acceptable threshold, the best way to do that is to head off the growth of motor vehicle usage, meaning vehicle kilometers traveled (VKT). MM is not the most effective tool in policy makers’ toolbox to head off vehicle usage. Rather, travel demand management, prioritization of public and active transport in investment and traffic management decisions, and better integration of land-use and building controls with transport investments to reduce the dependence on private motor vehicle use as the principle means of enhanc- ing accessibility should be the tools of choice to constrain the growth of private motor vehicle usage. 33 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY That said, MM can be used to complement such efforts to prioritize alternatives to car use and car-de- pendent accessibility enhancement in a number of key ways. First, the mechanisms of vehicle gov- ernance might be used to establish and enforce per vehicle usage limitations. Fiscal and regulatory policy can be used to incentivize and facilitate the use of leasing as an alternative form of vehicle availability payments; leasing could provide better legal and financial incentives for vehicle owners to limit vehicle usage. In addition, motor vehicle importation (or manufacturing) regimes can assign lifetime vehicle usage caps to vehicles which may restrain growth of VKT. Second, the same mech- anisms of vehicle governance could also be used to shift the burden of the lifetime costs of vehicle ownership from fixed to variable. By “variabilizing” costs (for example, shifting fiscal policy such that the revenue-raising potential of a vehicle is more dependent on use than up-front acquisition and/or recurring registration), vehicle owners would have an economic incentive to use their vehicles less. All else equal, the less vehicles are used, the more viable are the alternatives, creating a virtuous circle reducing overall demand for vehicles. In theory, the mechanisms of MM could also be used to place more direct constraints on motor vehi- cle acquisition and ownership, like increasing the costs of motor vehicle acquisition or even putting direct quotas or limitations on the number of vehicles that can be imported or registered. Such mech- anisms should be viewed with healthy skepticism. Measures to make vehicle acquisition or ownership more expensive or otherwise limit opportunity for vehicle ownership on their own can produce per- verse effects which may be counterproductive. Specifically, there are theoretical reasons and empir- ical evidence to suggest that while increasing the costs of vehicle ownership may indeed reduce the number of vehicles in a stock, it may create a perverse incentive for greater use of each vehicle. With higher vehicle ownership costs, owners are more likely to reason that they need to increase their usage of the vehicle in order to “recover” their investment.a Schipper and colleagues at Lawrence Berkeley National Laboratory, in their seminal work in the 1990s comparing motor vehicle use, own- ership, and energy consumption among OECD countries, found evidence of this phenomenon when looking at car ownership and usage rates in Western Europe (Schipper 1995). a Another way to understand this phenomenon is that high acquisition costs encourage an “average-cost” mindset to reducing car-related expenses by households and fleet owners, while high usage costs encourage a “marginal-cost” mindset. See, for example, UNESCAP and AITD (2001) or Walter and Suter (2003) for additional explanation. Source: World Bank. 34 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Box 3.6. Ensuring Continuity of Fiscal Resources The objectives of any Motorization Management (MM) policy (for example, having a more fuel-effi- cient vehicle stock) or the measures to effect those policies (for example, adjusting price incentives to purchase and use more efficient vehicles) will inevitably have an impact on fiscal resources. For example, many countries fund road maintenance programs using the stream of revenues expected from fuel taxes. For many countries, import duties and value added tax (VAT) on different categories of motor vehicles imported for use also represents an important source of revenue for the general treasury. Accompanying any efforts to define different policy outcomes from an MM approach, there- fore, is the need to, at a minimum, carry out fiscal impact studies to at least understand the extent to which revenues will be affected by the goals and measures contemplated. More proactively, MM poli- cies should ideally be designed to ensure that destabilization of revenues does not produce unwanted consequences, such as deferred road maintenance. This may mean finding alternative sources of revenue that might otherwise be lost by an MM-driven policy, or else ensuring revenue neutrality in the design of specific incentives. The recognition of the need to avoid unwanted consequences from revenue perturbance, and the preferred methods to do so, could be stated as a matter of policy. Source: World Bank. Key Concepts for Framing Motorization Management Policy In seeking to manage trade-offs among different Vehicle Entry policy outcomes and stakeholders, country pol- icy makers will face an array of possible policy and To protect public health and safety, vehicle importa- implementation options. MM, therefore, cannot be tion or manufacturing thresholds should be used; to prescriptive; it must take the form resulting from meet national public policy goals, economic incentives the political economy of national or regional circum- targeted to vehicle purchasers, manufacturers, or stances. But to help frame the discussions in which importers generally work best. such policies and objectives are developed, in this section we lay out 10 key concepts organized accord- Command and control policy instruments, such ing to their relevance to motor vehicles at different as regulations, can be more effective in delivering phases in their life cycle. These concepts are not health and safety outcomes than fiscal incentives intended to be prescriptive—indeed, many may ini- because they establish thresholds that determine tially seem counterintuitive—but rather seek to stim- minimum standards that each and every vehicle ulate understanding of the ways MM might influence entering a country’s vehicle stock must adhere to. To motor vehicle stock evolution. be effective, however, they require well-functioning 35 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY monitoring and enforcement systems and insti- Another popular approach is the use of “feebates,” a tutional capacity to ensure that the standard is potentially revenue neutral incentive whereby excise obtained. As will be discussed below, these systems duties vary around an increasingly stringent target and capacity need to minimize the absolute incidence value such that purchasers of vehicles that exceed of fraud to be effective. the target value pay a fee, while those that purchase vehicles rated lower than the target receive a rebate. Fiscal and financial incentives, on the other hand, might be more appropriate instruments to push the Age is not a good proxy for air quality, safety, or fuel vehicle stock in intended directions to meet national efficiency performance characteristics of light-duty goals over time because they can affect the economic vehicles, especially those in noncommercial service; to calculus about when and what type of motor vehicle improve light-duty vehicle stocks, policies should focus to acquire. Due to their voluntary nature, fiscal and on specific air quality or safety performance features, financial incentives can take longer to induce signifi- or fuel intensity characteristics, rather than age alone. cant change, when compared to a regulatory instru- ment. However, their effectiveness does not depend Performance-based thresholds are a more precise on a country’s regulatory enforcement capacity. approach than age-based limitations. Performance- based thresholds entail establishing a lower bound Fiscal or financial incentives can refer to any policies of acceptability for each vehicle type entering the that change the price to consumers of acquisition national stock for the first time, and for the fuels that and/or ownership of certain kinds of vehicles com- power them. Examples of parameters used to define pared to others. These can be in the form of incen- performance-based thresholds are vehicle tailpipe tives or disincentives, such as setting customs tariffs emissions and vehicle crashworthiness levels. or registration fees3 based on vehicle technology or emissions standard, or financial incentives, such as In practice, many countries that are predominantly vouchers toward purchase of certain kinds of vehi- dependent on vehicle imports rather than domestic cles subject to conditions, or preferential finance or production for annual vehicle stock addition tend to leasing terms for acquisition of vehicles consistent limit vehicle addition based on year of manufacture with the policy objective. Typical measures to affect of the vehicle. In a survey of 155 countries world- relative acquisition or ownership prices include differ- wide, a report by the United Nations Environment ential excise duty rates and/or registration fees—dif- Programme (UNEP) found that 87 countries have ferentiated, that is, against a public policy parameter import limitations based on age, including 22 which of interest, such as accelerating use of advanced do not allow importation of used vehicles. An addi- vehicle safety features or reducing fossil fuel energy tional 17 countries do not prohibit vehicle impor- consumption of the fleet. The latter might use proxy tation based on age but do impose taxes or excise measures to represent reduced fossil fuel energy duties based on vehicle age. In contrast, 61 countries consumption, such as vehicle size, engine size, pro- limit imports based on emissions control technology pulsion type, fuel type, and/or standardized CO2 and 11 countries limit imports based on roadworthi- emissions rates (for example, grams per kilometer). ness performance (UNEP 2020). 3 “Registration” of vehicles can have different meanings in different countries. In this report, we refer to “registration” as the collective set of recurring administrative processes by which vehicle owners demonstrate compliance of the vehicle to norms and standards established by the relevant authority throughout the vehicle’s active life under the control of a particular owner. This can include renewal of authorization for the vehicle to be operated on public streets; maintenance of license plates; certification of safety and emissions compliance following inspection; payment of time-based facility access fees, such as residential parking permits or highway usage stickers; and/or payment of recurring personal property taxes that might be applicable to the vehicle. 36 MOBILITY AND TRANSPORT CONNECTIVITY SERIES The reasons for the use of age-based rather than example, analysis of National Transport and Safety performance-based specifications to restrict vehicles Authority (NTSA) new vehicle registration data by the entering the national vehicle stock are not always World Bank of the impacts of Kenya’s restriction of articulated in policy formulation, but their use implies imported LDVs to less than eight years showed that that policy makers assume that vehicle age is a good 80 percent of imported cars in Kenya in 2015 were proxy for vehicle safety, fuel efficiency, and envi- seven years old at the time of import (Gorham et al. ronmental performance. That said, there is no clear 2017). A scatter plot of in-vehicle fatality rate rank- evidence that age-based import restrictions are more ings (using data from the WHO) and countries that effective than performance-based restrictions at limit age of vehicle imports from the UNEP compen- advancing any policy objectives, other than reducing dium for the 79 countries for which data are avail- the average age of vehicles circulating. able for both (see Figure 3.1) shows no correlation between the two, suggesting that, at least as far as An analysis of available data suggests that buy- road fatalities are concerned, age is not a particularly ers tend to purchase up to the available limit. For effective instrument. Figure 3.1. Plot of In-Vehicle Traffic Deaths Against Age-Related Import Restrictions 200 Worldwide ranking of in-vehicle deaths per 100,000 population 180 160 140 120 (WHO) 100 80 60 40 20 0 0 2 4 6 8 10 12 14 16 Age Restriction (maximum allowed to be imported) Source: World Bank calculations based on World Health Organization (WHO) traffic accident fatality data (2015) and UN Environment Programme (UNEP) compendium of import restrictions on used vehicles. Note: Data as of 2015. 37 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Detailed data on vehicle emissions and resulting have substantially different crash-test results across death and disability are not available to similarly different markets (Global NCAP 2015), suggesting assess impact of age restrictions on these character- that characteristics of vehicles actually sold are more istics, nor are time-series data for either fuel econ- important than age per se. We speculate about the omy or safety impacts. However, for the reasons dis- assumptions underlying this widespread use of cussed above, there is no inherent reason to expect age-based restrictions in Box 3.7. Use of Age-Based substantial correlation. Further, analysis by the Global Restrictions As a Proxy for Vehicle Performance, New Car Assessment Programme (Global NCAP) has Speculation on Underlying Biases. shown that new models of similarly branded vehicles Box 3.7. Use of Age-Based Restrictions As a Proxy for Vehicle Performance, Speculation on Underlying Biases The use of age-based restrictions as a proxy for vehicle performance in terms of safety, economy, and emissions can be misleading and may be linked to the following questionable assumptions: Newer vehicles perform better because they utilize more advanced technology. The variability of intrinsic technology use across different markets, the widespread prevalence of vehicle tampering in secondhand markets, and the poor quality of fuels available in many countries means that the asso- ciation of vehicle age with performance is, at best, crude, and, at worst, deceptive because expected benefits do not materialize.a Newer vehicles perform better because they have less wear and tear. Evidence shows that emissions and crash avoidance performance of vehicles are related more to how well the vehicles are maintained. Well-maintained old vehicles perform as well or better than relatively new but poorly maintained vehicles in these aspects. In addition, the underlying variability in fuel economy among individual vehicles of a given class is more related to the intrinsic characteristics of the vehicles at manufacture than age-related deterioration, and the overall efficiency of the vehicle stock as a whole is more related to the classes of vehicles that are bought (for example, sport utility vehicles versus small sedans) than the age of those vehicles.b,c In short, if fuel economy is the key objective, restricting age on its own is an ineffective policy instrument. Age is easier to filter for than performance. In this understanding, rather than set up an elaborate inspection mechanism for new vehicles, countries simply need to verify a single Boolean filter that can be observed from paperwork: Is the vehicle’s model year of production higher or lower than the model year currently allowed entry? But this understanding overstates the simplicity of checking for vehicle age and the complexity of checking for performance characteristics. In both cases, the primary 38 MOBILITY AND TRANSPORT CONNECTIVITY SERIES checks are made on paperwork—like age, performance characteristics are most effectively checked through an import certification process that ensures that the vehicle conforms with the requirements. In both cases, as well, controlling for fraud and corruption needs to be an important part of the pro- cess.d Even if it could be shown that age-based filters were “easier” for countries with limited capacity to implement than performance-based filters, the underlying logic that such filters should, therefore, be preferred is somewhat circular. The basis for policy choices should not be ease of implementation per se but effectiveness. Ease of implementation may be one among a number of characteristics that determine whether a given policy will be effective, but in and of itself, it tells nothing. Elite bias may influence policy. A fourth factor that may influence the use of age rather than perfor- mance standards in setting standards for vehicle import may be elite bias, in which the perception is that older vehicles create a poor image for the country and may not project modernity. a New models of similarly branded vehicles have substantially different crash-test results across different markets. For example, the Datsun Go by Nissan and the Maruti Suzuki Swift car models scored zero in crash tests conducted in India while scoring three in tests conducted in Latin America. This was due to lower structural integrity and lack of airbags in models offered in India (Global NCAP 2015). The efficiency of tailpipe emissions after-treatment systems is reduced by fuels with high sulfur content. Detrimental impacts are particularly felt in diesel particle filters, lean NOx traps, and selective catalytic reduction. In recognition of this, it is important to design and implement vehicle emission standards in conjunction with fuel quality standards. In practice, countries often implement fuel quality standards in a phased manner, and some may face difficulties in controlling fuel quality due to cross-city and cross-region spillovers. Worldwide, countries have adopted road maps for improvement of fuel quality. In 1999, India reduced diesel sulfur content from 10,000 ppm to a maximum of 350 ppm and more than 23 cities now have diesel fuel with 50 ppm sulfur content. China instituted a ceiling of 50 ppm sulfur content by 2015 and 10 ppm by 2018. South Africa limited sulfur content to 50 ppm in 2007 and 10 ppm in 2017 (Bansal and Bandivadekar 2013). b Fuel efficiency varies significantly in most vehicle classes as can be seen in the overview of best and worst fuel economy vehicles in 2020, by EPA size classes, prepared by the U.S. Department of Energy. See https://www.fueleconomy.gov/feg/best-worst.shtml. c The report shows that while the fuel economy improved for each vehicle type between 0.2 mpg and 1.2 mpg during the period from 1975 to 2018, the estimated real-world fuel economy for the overall fleet was lower at 0.2 mpg due to market shifts from sedan/wagon toward SUV. See https://nepis.epa. gov/Exe/ZyPDF.cgi?Dockey=P100YVFS.pdf. d It is as possible for paperwork to be doctored to show a newer model year than corresponds to the actual vehicle imported as it is to show the presence of emissions control equipment or safety features that do not actually exist on the vehicle imported. In both cases, corrupt officials could allow those ineligible vehicles to pass through for the right price. Source: World Bank. 39 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Active Use Purchase of a vehicle is a large and lumpy invest- ment and brings along with it a commitment to meet Enforcement actions are more effective if accom- recurring expenditures to keep the vehicle in opera- panied by strong communication and education tion. Commercial operators tend to be aware of the programs. long-term effects and implications of this stream of expenditures and would likely take these into account In order to advance policy objectives from the in-use in their purchasing decisions, but noncommercial vehicle stock associated with MM, vehicle owners, buyers—those buying for personal use—may be less fleet managers (if different from the owner), and aware of the long-term economic implications of their operators may need to comply with more stringent purchase. Even if the buyer is aware of long-term norms regarding vehicle registration, use, main- economic costs of a vehicle purchase decision, he or tenance, and inspection than in the past in order she may have limited opportunity to reduce these to ensure that the use of the vehicles is within because of limited information and/or limited vehi- acceptable danger limits, and in order to enable cle financing options in the marketplace. For these public authorities to verify that this is the case. reasons, providing information and more financing Communication and education with the public are alternatives to vehicle consumers is an important way critical to ensure acceptance of increased burdens to make sure that vehicle turnover happens more on vehicle owners, managers, and operators, and frequently and better matches consumers’ economic enhance understanding of the rationale underly- needs with public policy objectives. ing enforcement actions. The costs of vehicle own- ership, in terms of both resources and time for the One way to improve information flows is to make owner/manager, will likely increase, and educating vehicle data available to the general public. In the the public on the public policy rationale for imposing United States, for example, the National Highway these cost increases will facilitate acceptance. In the Traffic Safety Administration (NHTSA) makes cer- absence of a clear understanding of the public policy tain data about individual vehicles, submitted to it behind enforcement actions, public perceptions will by manufacturers, available for use by third parties. impute pecuniary motives to the specific individuals Prospective buyers of vehicles can query the Vehicle charged with carrying out enforcement, which would Information Number (VIN) on any number of these be open to interpretation as either double taxation or third-party sites to learn characteristics about the an attempt at corruption. A communication and edu- vehicle, including how old it is, how many kilometers cation campaign can help reduce the extent to which it has been driven as of last inspection or registra- this perception occurs and increase acceptance. In tion, what kind of safety equipment it has (or should addition, such a campaign might also help improve have), what emissions standard it has been certified compliance rates at the margin. to, what its certified fuel economy was at the time of first sale, whether it has been involved in any major Lifestyle or economic transition points are the most or minor accidents, etc. Combined with awareness important moments to influence households and firms’ about the data and education about what these decisions about their vehicle fleets; at these moments, factors mean for individuals, the provision of infor- they are susceptible to being nudged toward more mation can be a powerful way to influence the motor sustainable choices when information and finance vehicle market. options are available. 40 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Similarly, financing alternatives can help reduce the limited circulation rights); use of low-emissions zones, impact of large and lumpy investments by spreading whereby only vehicles certified to exceed certain costs more evenly over the lifetime of the vehicle. In emissions thresholds are allowed to circulate in cer- developing countries, the nonavailability of financing, tain areas, like densely populated or historic districts; or the limited options and financing terms for what or differentiating how and where vehicles are allowed little is available, is a well-known and common prob- to be used on the basis of adherence to different lem across different parts of the world, particularly safety and emissions thresholds. for commercial operators. For example, it is often cited as one of the reasons for ongoing slow uptake Assigning lifetime usage limits when vehicles are added of electric vehicles (EVs) in commercial public trans- to the national stock through either import or manu- port operation, even though the life cycle costs of EVs facture could be an equitable way to address the long- in many markets are lower than their conventional term challenge of an aging and obsolete vehicle stock. diesel counterparts (World Bank 2019). Because motor vehicles have a very long anticipated Vehicle Exit useful life in low- and middle-income countries, and because of low-carbon technology shifts that are Changing the permitted uses for current vehicles in expected to be dominant over the next one to two the stock as they age may be a more politically accept- decades, finding new ways to make sure that obso- able way to manage risks caused by usage of obsolesc- lete technologies are eliminated from motor vehicle ing vehicles rather than abruptly banning their use. stocks in low- and middle-income countries is par- ticularly important. A used vehicle imported into a A key challenge in developing countries where large low- or middle-income country today may still be on proportions of the population have very low pur- the road 20 years later if there are no mechanisms chasing power is that a vehicle’s residual value for or incentives to get it off the road. Under many, if the owner or operator often long outlasts the point not most, countries’ jurisprudence, once a vehicle is at which the vehicle becomes a menace in terms of imported and registered for use, the prerogative of safety or pollutant emissions. An effective MM pro- the owner to use the vehicle as long as he or she sees gram, therefore, should recognize this reality and fit will usually preempt the public interest in retiring seek to align the ability of owners to continue to the obsolete technology. One way around this could get benefit from their vehicles while minimizing the be to condition the importation permit of the vehi- exposure of populations to these risks. Such a policy cle in the first place to a set lifetime usage limit. The would make explicit and controlled what is de facto absence of an MM program would preclude such common but variable practice in the industry: as vehi- lifetime usage limitation as impracticable, but if MM cles age, they tend to cycle from urban, to peri-urban, mechanisms are put in place, then enforcing a cap then to rural use, from heavy to lighter uses, and on lifetime usage of the vehicle becomes feasible. from passenger-serving to freight-serving uses. The distributional and equity implications of any such Examples of how such a principle could be imple- lifetime usage cap would, of course, need to be evalu- mented in practice include adoption of mile- ated for each country considering such a policy. age-based annual registration fees for very old vehi- cles (a common practice in the United States, Canada, The lifetime usage cap could be based on vehicle age, and Western Europe to enable “legacy” vehicles’ mileage, or CO2 emissions. A lifetime CO2 emissions 41 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY cap is perhaps the most interesting from a public pol- On the other hand, for countries farther along the icy point of view because such a cap could not only motorization process, greater emphasis on turnover meet the public policy goal of facilitating the retire- and replacement is warranted because there is a risk ment of obsolete vehicles, but also help incentivize that, without such emphasis, the overall performance short-run purchase decisions toward more efficient of the vehicle stock will be dominated by existing, and vehicles. If potential importers or their customers possibly obsolete, vehicles. know that vehicles’ usage is capped based on lifetime CO2 emissions in the country—this would be calcu- That said, it is also important to differentiate by lated by multiplying a reference CO2 emissions factor, subsector and the intensity of use implied. For heav- such as that established at production certification ily used LDVs in commercial use, as for most HDVs, in the country of manufacture, by the annual vehicle incentivizing turnover may be important regardless mileage—then they can get more use out of their of the where on the motorization curve a particular vehicles within the allowable cap by choosing more country is because of the public health implications efficient vehicles. (in terms of both safety and air quality) of using obso- lete technology where population exposure rates For heavy-duty vehicles and light-duty vehicles used may be high. for commercial transport, incentivizing vehicle turn- over (for example, replacement and scrappage) is as Management of End-of-Life Vehicles and batteries important as the quality of vehicles brought in. For must not be an afterthought, but rather built into light-duty vehicles used for own-account transport, the Motorization Management framework from the the relative importance of vehicle turnover/replace- beginning. ment depends on where an individual country is on the motorization curve; incentivizing turnover becomes If vehicle turnover is an important objective of MM, more important as motorization penetration increases. then getting into place effective End-of-Life Vehicle (ELV) systems will be crucial because, sooner or later, Motorization policy should ideally reflect where a large numbers of vehicles will need to be retired country is on its motorization path, as portrayed in and disposed of. There is a strong case to be made figure 2.1. For countries toward the left side of the that ELV management should play a critical role in figure, focusing heavily on incentivizing vehicle turn- MM programs even for countries at the low end of over may make no sense because of the expected the motorization curve shown in figure 2.1. First, as rate of motorization growth. In these countries, discussed above, for many classes of vehicles, such emphasis should be on making sure that the vehi- as HDVs and vehicles used commercially, limitations cles allowed to enter the country during the period on the use of obsolete vehicles could be an important of steep growth are as clean, fuel efficient, and safe public policy measure to protect health and safety, so as possible because they will dominate the overall there will still be a large number of vehicles to prop- performance of the stock for years, if not decades. erly dispose of even where motorization rates are low. 42 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Second, managed ELV programs, whereby the waste not properly handled. For these reasons, we advo- stream from vehicles is actively accounted for, could cate that countries should not wait to attain a certain create opportunities for economic or employment level of motorization before developing ELV manage- development that are not immediately recognized in ment programs. an unmanaged system. What presently accounts for scavenging of old vehicles for parts could transition Motorization Demand to a structured program of vehicle materials life cycle management, from the vehicle development, produc- Although Motorization Management focuses on vehi- tion, and post-production phases until scrappage. cles, it is the use of those vehicles that is the source of environmental and safety risks as well as accessibility Third, mandates in vehicle manufacturing countries benefits to societies. to enhance the circular economy require manufac- turers to be able to track vehicles through their life MM addresses the governance ecosystem in which in order to recover and reuse materials from motor motor vehicles are managed, but the objective of vehicles.4 The absence of ELV management systems improving this management is not to improve vehi- in recipient countries of secondhand vehicle trade cles per se, but rather reduce the negative external- consequently represents a substantial blind spot in ities associated with vehicle use. This distinction is the efforts to improve materials management and subtle, but critically important, because policies that meet circular economy goals. As the precious and target vehicles that are not used intensively will be rare earth metal content of vehicles and batteries less impactful than those that are oriented toward increases, economic pressure to recover these mate- vehicles that are likely to be very intensively used. rials will also increase. Moreover, policies that focus primarily on the vehicles without accounting for how they are used may also Fourth, managed landfill space in any country is in create perverse incentives. For example, in the 1980s relatively scarce supply; not having an effective ELV and 1990s, Danish policy sought to increase the cost program that can help reduce the volume of the of LDV acquisition through taxes and tariffs in an unrecycled materials of ELVs might, therefore, be effort to restrain the rate of motorization. However, quite costly. when researchers examined overall LDV use (vehi- cle kilometers traveled; VKT) in Denmark compared Finally, and most importantly, disposal of motor to other countries in Europe, they could not detect a vehicles can generate hazardous waste which, if not difference. It turned out that, on average, each LDV properly handled, can pose a risk to human health was used more intensively in Denmark than else- and the environment. Motor oils, fuels, and battery where in Europe, probably as a result of the added acids can seep into area groundwater, and refriger- cost of acquisition. That is, increasing the cost of vehi- ants used in motor vehicle refrigeration units and air cle acquisition seems to create a perverse incentive conditioning can be released into the atmosphere, for vehicle owners to reduce the average cost of the where they are potent greenhouse gases (GHGs), if investment by driving more (Schipper 1995). 4 The most prominent of these mandates include European Union Directive 2000/53/EC on End-of-Life Vehicles which mandated not only collection, treatment, reuse and recovery, development of coding standards, and dismantling information for ELVs and their components, but also prevention of creation of waste through use of recycled and recyclable materials; the ELV Recycling Act (enacted 2002, in force 2005) in Japan; and the Act for Resource Recycling of Electrical and Electronic Equipment and Vehicles in the Republic of Korea (2007). 43 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Managing motorization must be understood as one important to bear in mind that how effective Avoid element of a broader, sustainable transport approach; and Shift policies are will, in turn, affect the shadow Motorization Management policies should align with price of acquiring and using motor vehicles—that is, that approach and take into account both vicious and what is the relative cost of acquiring and using motor virtuous effects broader policies may have on motor vehicles compared to other modal and lifestyle alter- vehicle demand. natives given a set of public policies enacted and pub- lic investments being undertaken? Understood this MM should be understood as one component of, not way, it is clear that MM measures will be more effec- a substitute for, good transport policy. As discussed tive if conceived of and implemented in a broader ASI above, MM measures would seek to influence the policy context. vehicle component of I in an ASI approach. But it is References Anenberg, Susan, Joshua Miller, Daven Henze, and Ray Minjares. 2019. A Global Snapshot of the Air Pollution-Related Health Impacts of Transportation Sector Emissions in 2010 and 2015. Washington, DC: ICCT (International Council on Clean Transportation) with George Washington University Milken Institute School of Public Health and the University of Colorado, Boulder. https://theicct.org/publication/a-global-snapshot-of-the-air-pollution-related-health-impacts-of- transportation-sector-emissions-in-2010-and-2015/. Bansal, Gaurav, and Anup Bandivadekar. 2013. 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The components of such a methodical growth and stock turnover. approach can be grouped into five core areas, what we refer to as the elements of the Motorization As suggested in Figure 4.1, these elements are not Management (MM) framework: establish goals necessarily sequential, but rather should work har- through a clear and transparent policy process, moniously in a continuous cycle of improvement. gather and assess data using continuous analytics, They will be discussed in turn. adopt and promulgate vehicle and fuel standards Figure 4.1. Core Elements of a Motorization Management Approach Clear and transparent policy process Funding vehicle Continuous stock analytics growth/turnover Nuts and bolts of Prospective vehicle vehicle & fuel management standards Source: Original figure produced for this publication. 47 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Establish a Clear and Transparent Policy Process for Setting Goals and Priorities As highlighted in the discussion under the and support from OEMs remains critically import- “Motorization Management in the Policy” section ant because they may otherwise seek to undermine in chapter 3, legitimate policy objectives related to consensus on policy development if they fear it will motor vehicle governance may conflict with one inhibit their ability to provide vehicles for the market. another. Establishing a structured process by which They will also need to certify/warrant new vehicles, to put in place motor vehicle policies involving mul- and in some cases, honor the certificates or warran- tiple stakeholders is, therefore, a critically important ties of secondhand vehicles. part of the MM process. Which stakeholders should be included depends on local context, but would The overall policy-making process itself could be likely include representatives of motor vehicle import- managed by the central government if it has the ers; operators’ associations from different subsectors, capacity to do so, or, more ideally, through a regional like intracity passenger transport operators, intercity economic bloc with support of its members, for passenger transport operators, taxi operators, or example, through a series of structured meetings commercial freight transport operators; represen- of the stakeholders facilitated through a secretariat tatives of automotive aftermarket industry, such as and informed by commissioned background papers vehicle parts suppliers or the motor vehicle repair on relevant topics. Alternatively, depending on the industry; representatives from subnational govern- political economy of the country and the regional ments or civil society groups that may have a particu- context, the policy process might be anchored in aca- lar stake in air quality, road safety, or climate change demia or instigated by the private sector. However outcomes; and representatives of petroleum product initiated, the transparent process is most likely to be suppliers, to ensure that fuel standards are consis- successful if all stakeholders share an understanding tent with MM policies developed. Original equipment that the status quo is both untenable and likely to be manufacturers (OEMs) should also be considered disrupted in the medium term. With rapidly changing key stakeholders, even if there is little or no automo- technologies and the industry worldwide in flux, get- tive manufacturing in the country, and even if vehi- ting to this shared understanding may not be particu- cles are acquired into the national stock primarily larly challenging. through importation of secondhand vehicles. Buy-in Gather and Assess Data with Continuous Analytics Motorization policy should be grounded in empiri- at the national level. These parameters also need cal analysis based on evidence of what works. This to be gauged against other factors in the economy, means developing mechanisms to be able to observe such as fuel prices (and fuel price fluctuations), eco- and track characteristics of car and truck ownership, nomic indicators, industrial structure, and so on. motor vehicle use, energy consumption by different The fundamental basis for this type of analytics is kinds of vehicles, on-road fuel intensity, new car fuel access to good quality data on a reliable and sustain- intensity, and other characteristics of road transport able basis. The good news is that many, if not most, 48 MOBILITY AND TRANSPORT CONNECTIVITY SERIES governments already systematically collect this type it is useful for data governance to be institutional- of data as part of their taxation and governance sys- ized, founded in clear provisions in policies and legal tems vis-à-vis motor vehicle stocks. The bad news is frameworks that set institutional mandates, bud- that many do not make this information available to gets, coordination mechanisms, and standards. Data researchers on a sustained basis, particularly in low- governance can be supported by business plans that and middle-income countries. are established to address stakeholder needs and to deliver on agreed goals. The availability and access to high-quality data on MM has the potential to generate benefits in a variety Low- and middle-income countries frequently expe- of fields. However, benefits are often not recognized rience varying levels of capacity on data governance due to uncertainty about the value potential of the for MM. Vehicle registries can be updated with new data, lack of strategy to capitalize on data sharing, vehicles entering the country’s vehicle stock, but the investments required to develop the systems, there may be no requirement to keep track of vehi- and capacity to compile, manage, exercise quality cle resales within a country or when vehicles are control on, and share data, among other factors. This scrapped and exit the fleet. Frequently, motorization can be accompanied by concerns related to privacy, data are collected as part of individual studies under security, competitiveness, accountability, and the specific projects and do not observe a specific data desire to avoid additional or more stringent legisla- standard. There is a lack of data management sys- tion. Frequently, data governance is an unfunded, tems and infrastructure that enable interoperability low-value agenda item for government agencies. As and make data available for combining and repur- a result, relevant data for MM are often scattered posing for different applications and different users. across different agencies, are incomplete and of vari- There is a lack of technical and administrative capac- able quality, and have high barriers to access them. ity and of budget to implement and enforce data The data required for effective MM are varied. They management processes. It is also common to have can encompass, for example, the number of vehi- different data sets for the same parameter being cles registered by vehicle type; vehicle imports and owned by separate agencies. exports by vehicle type; and vehicle characteristics, including vehicle fuel efficiency, emissions levels, Countries can manage the situation by centralizing safety provisions, among others. The number of the governance of official data within one institu- parameters to be collected and managed can be tion, like the national statistical office, and by estab- extensive and cover diverse business areas. Data can lishing the systems and requirements for regular be required at various levels of granularity, such as compilation of data from other institutions and the national, regional, and local levels, and are required publication of defined parameters. This is a positive to be compiled and managed continuously over time. step forward as it clarifies data ownership and which data sets are official. This requires that agencies have Data relevant for MM can be generated by public in place the technical and administrative capacity bodies, businesses, citizens, and the vehicles them- and processes to collect data and manage it within selves. Several agencies may be involved in data col- established quality standards. A challenge that is fre- lection, management, and dissemination. Therefore, quently encountered is that the statistics published 49 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY are often too aggregated or incomplete to be use- Safety (GSRRS) publication. The private sector globally ful for policy analysis. In addition, each country may shares data with data aggregators and data mar- aggregate data differently which results in difficulties ketplaces, generating new revenue streams, while in cross-country analysis and benchmarking. keeping in control of data and handling data privacy concerns. The global automotive ecosystem is com- Countries collaborate internationally within spe- plex, and partnerships fluctuate.1 These initiatives cific fora and initiatives, such as in the International provide a useful contribution to increase data avail- Energy Agency’s (IEA’s) data tools and products, the ability globally. The level of openness of data varies International Road Federation’s (IRF’s) World Road by country income group, with low-income countries Statistics (WRS) publication, and the World Health presenting a lower openness scope (see Table 4.1). Organization’s (WHO’s) Global Status Report on Road Table 4.1. Assessment of the Openness of Data, by Country Income Group Indicator Low-income Lower-middle- Upper-middle- High-income income income Openness score (0–100) 38 47 50 66 Available in machine readable format (%) 37 51 61 81 Available in nonproprietary format (%) 75 85 81 84 Download options available (%) 56 68 68 78 Open terms of use/license (%) 11 19 22 44 Source: World Bank 2021. Note: The openness score is the average by country income group on a scale of 0 to 10. The World Development Report 2021 (World Bank empower low- and middle-income countries to partic- 2021) proposes to extend the goal of generating and ipate equitably in global data markets and their gov- making available more high-quality data to strength- ernance and to strengthen their infrastructure and ening the capacity for using data more effectively skills to turn data into value (see Figure 4.2). toward development outcomes. It is essential to 1 Original equipment manufacturers (OEMs) give high priority to data privacy as leaks or issues may have a negative effect on the trust, reliability, and reputation of the brand (KPMG 2020). 50 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Figure 4.2. Positive Feedback Loop Connecting Enablers, Features of Public Intent Data, and Greater Development Value Source: World Bank 2021. To get started, low- and middle-income countries can implementation. Low- and middle-income countries define their future vision and develop a road map to can also be supported in terms of assessing finan- deliver on it. Bridges can be built between data sci- cial needs and funding sources for data governance. ence and transportation, between relevant agencies, Support can also be provided to build systems and departments, and partners. Low- and middle-income infrastructure for data governance, establishing data countries can define the needs, issues, and problems standards, protocols, and processes, for example, to that they would like to address and set objectives for streamline the cleaning and anonymizing of disag- big data analytics. gregated data. Stakeholder awareness should be raised on the benefits and the business case for data Low- and middle-income countries can be supported sharing as well as on the safeguards in place. And to strengthen their legal frameworks for enabling last but not the least, low- and middle-income coun- data sharing and establishing safeguards for man- tries can be supported to build the capacity required aging associated risks, and to strengthen institu- to produce analysis and to capture the value created tional technical and administrative capacities for by the improved data quality and availability. 51 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Adopt and Promulgate Vehicle and Fuel Standards Prospectively Using Dynamic Profile of Standards for Vehicle Stock Evolution Goal setting and analytics should lead to the prom- effect, allowing manufacturers to plan and adjust ulgation of transparent vehicle and fuel standards, their business strategies, procedures, and market- both for the addition of vehicles to the national stock ing approaches. In the case of increasingly stringent and for the minimal requirements of in-use vehicles pollutant emissions limitations (as well as different to be allowed to remain circulating. To be clear, vehi- approaches to improving average fleet fuel economy cle and fuel standards alone are not effective tools or CO2 emissions intensity), the initial motivation was of MM but effecting improvements to vehicle stocks to put in place technology-forcing rather than technol- is unlikely to be successful without them. In other ogy-following limitations, but the effect has been to words, vehicle and fuel standards are necessary but level the playing field and provide clarity to allow man- not sufficient elements of MM. Standards have two ufacturers and fuel suppliers to carry out multiyear key functions. First, they establish the legal basis on strategies to position themselves in the marketplace. which incentives and enforcement actions can be developed and targeted. Second, for countries reliant In many developing countries, such long-term clarity largely on imports of secondhand vehicles, they form and transparency is lacking. Where private manufac- an unequivocal statement to importers and export- turers looking to develop country or region-specific ing countries of what standard of vehicle and fuel will strategies would like clarity, instead, they have murk- be permitted. In this sense, even if a given country iness. Where they seek consistency in approach not lacks the implementation wherewithal to fully enforce only among countries, but also over time within an its own standard, simply promulgating the standard individual country, they have potential fickleness that might help the governments of exporting countries inhibits their ability to develop a long-term marketing justify prohibition of their export. strategy that extends beyond a year or two. One of the main purposes of vehicle and fuel stan- A public process to define a policy vision within a dards, both as a legal document and as a signal to given vehicle market is a very important part of MM importers and exporters, is to provide clarity to public in order to establish clarity for vehicle manufacturers and private actors. In Organisation for Economic to understand and plan for national or regional mar- Co-operation and Development (OECD) countries kets. Dynamic Profile of Standards (DPOS) addresses with mature motor vehicle manufacturing indus- this need as it provides a blueprint for industry and tries, as well as in China and India, a common refrain stakeholders about how regulatory standards for among manufacturers and policy makers alike is that vehicles to be added to the national vehicle stock will transparency is as important as the specific poli- be expected to change over a multiyear time frame; cies governing vehicle manufacturing requirements for example, over a decade. The objective of estab- themselves. Manufacturers need to know what the lishing a DPOS is to avoid repetitive ad hoc processes rules of the game are and be afforded ample time to to tighten regulations and instead to send clear plan their strategies accordingly. Government policy signals to the import and manufacturing/assembly makers, in turn, respond to this need: rules governing industries in or targeting a country or region so that requirements for fuels, vehicles, and manufacturing they can make adjustments. processes are established years before they go into 52 MOBILITY AND TRANSPORT CONNECTIVITY SERIES As a policy document developed through stake- using complete knock down (CKD) kits or other holder engagement, the DPOS can be implementa- techniques. If the vehicle is intended to be regis- tion-method neutral. That is, it might define how the tered for the first time in the country in question, profiles of entry vehicles should change over time, then the DPOS should apply. though it need not specify how such changes should be implemented—for example, through regulation • DPOS should emphasize technology-following or pricing incentives. Those details might be left to rather than technology-forcing standards. In coun- administrative decision. But the profile of standards tries with substantial domestic automotive manu- defined in the DPOS must be attainable and dynamic. facturing activity (for example, the United States, It must be attainable because otherwise stakehold- Canada, the European Union (EU), Japan, the ers will give the DPOS document no credence. And it Republic of Korea, China, India, etc.), standards— must be dynamic—that is, show the profile of stan- particularly those linked to fuel economy or pol- dards over time—both because the private sector lution emissions—have often been established needs to understand the rules of the game and how with the intent to force technological innovation they will change over a reasonably foreseeable time by automotive manufacturers. The Euro standards period, and because policy making/standard setting of the EU or Tier standards in the United States, is a time-consuming and costly endeavor, so rather for example, have formed the basis of a strategy than go through this painful process ad hoc every to ratchet up innovation by automobile and truck few years it is better to identify the changing profile manufacturers to improve commercialization of over time in one go. This also allows for more give technologies in anticipation of a future require- and take in negotiations with stakeholders. ment. By contrast, the objective of the DPOS in import-reliant countries, such as those of Sub- A DPOS can be an important part of an MM program Saharan Africa or Latin America, in most cases but use of such a policy instrument is generally not would be to constrain purchasing decisions for currently practiced by countries that do not have entry vehicles toward better-performing vehi- their own motor vehicle manufacturing industries. cles that already exist in other markets. Because Several characteristics would distinguish a DPOS in of this distinction between technology-following countries without a domestic manufacturing industry and technology-forcing standards, the sequence from similar instruments in countries that do have of standards that made sense in OECD markets such an industry. with substantial domestic production as a source of motorization growth may not make sense for • DPOS is meant to apply to all vehicles being added primarily import-reliant low- and middle-income to the national vehicle stock, not only “new” (not countries. For example, many experts advo- previously used) vehicles. The DPOS defines char- cate that Euro 5/V standards add little value to acteristics that are intended to apply to all vehicles import-reliant low- and middle-income countries, added to the vehicle fleet in a given year, whether and that if standards are to be tightened beyond they are imported secondhand, imported for first Euro 4/IV, low- and middle-income countries use, manufactured locally, or assembled locally should move immediately to Euro 6/VI. 53 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY • There should still be participation and buy-in from access to needed spare parts. Similarly, consider- OEMs. Notwithstanding that the objective of the ation of availability of fuels compatible with given DPOS is to facilitate the use of existing technol- standards must be an integral part of the develop- ogy, not force innovation, buy-in and support from ment of any DPOS. More stringent pollutant emis- OEMs remains critically important because they sions standards associated with internal combus- will still need to certify/warrant new vehicles, and tion engines (ICEs), for example, are dependent in some cases, honor the certificates or warranties on the use of technology whose performance in of secondhand vehicles. For this reason, consulta- turn depends on the level of sulfur in fuels. tion with and involvement of the OEMs in estab- lishment of the DPOS is critical. The characteristics of fuels and vehicles that could be defined through one or more DPOS processes • Ratcheting up of standards must realistically include tailpipe emissions, fuel quality, vehicle safety reflect the capacities of the maintenance and (especially crashworthiness and use of advanced repair industries and availability of parts and crash avoidance technology), fuel economy of ICE compatible fuels and fuel distribution infrastruc- vehicles, and transition to alternative propulsion/ ture. An important consideration and constraint in energy systems. For practical reasons, countries the development of any DPOS must be the con- might consider separating the DPOS process into two comitant development of the maintenance and separate tracks—one for tailpipe emissions and fuel repair industry to service the increasingly complex quality, and another for vehicle safety and fuel econ- technologies associated with improved emissions omy.2 The constituencies for the two groupings may control technology, to service new vehicle tech- be slightly different, so separating along these lines nologies like electric vehicles (EVs), and to have may allow each to proceed on its own track. Strengthen the Nuts and Bolts of Vehicle Management Improving the performance characteristics of the the core of an effective MM system, as shown in motorized vehicle stock providing transport services Figure 4.3. Some countries may be more effective at in a given country will depend on improving the way some of these systems than others, but a compre- the stock is governed, so an important element of hensive assessment of MM capabilities should aspire MM, in addition to better policy making, improved to assess the effectiveness of these systems and analytics, and clarity in objectives, is improved gov- improve their functioning. These systems include the ernance of motor vehicles throughout their useful following: life. We identify 10 governance systems which form 2 Tailpipe emissions are closely dependent on fuel quality, so they should be considered together. Likewise, vehicle safety and fuel economy both depend on vehicle structure and weight, so should also be considered together. 54 MOBILITY AND TRANSPORT CONNECTIVITY SERIES • Motor vehicle information management systems; maintenance and repair industry; • Certification/homologation systems (for addition • Oversight and quality assurance of vehicle parts of motorized vehicles to national stock); production, acquisition, and distribution; • Periodic technical inspection (PTI) (for systematic • Oversight and quality assurance of vehicle body control of in-use vehicles); construction and modification; • On-road enforcement (to enhance integrity of PTI); • End-of-Life Vehicle (ELV) management; and • Public engagement and outreach. • Fuel quality assurance mechanisms; • Oversight and development of preventive Figure 4.3. Nuts and Bolts of Effective Governance of Motor Vehicle Stocks Overall systems governance 2. Motor vehicle information management systems Government oversight of vehicles and Development of human capital and fuels sustainability of automotive value chain 2. Certification systems for addition 6. Preventive maintenance and repair of vehicles to national stock industry 7. Quality assurance for vehicle parts 3. Periodic technical inspections production, acquisition, distribution 8. Quality assurance for vehicle body 4. On-road enforcement construction and modification 9. End-of-Life Vehicle (ELV) 5. Fuel quality assurance management Change management 10. Public engagement and outreach Source: Original figure produced for this publication. The remainder of this section discusses these systems in more detail. 55 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Motor Vehicle Information Management Systems A motor vehicle information management system databases for vehicle registration, licensing, inspec- (MVIMS) is perhaps the most basic and cross-cutting tion, and enforcement. The typical structure of of the programmatic measures to be able to use pol- MVIMS is shown in Figure 4.4, all of whose modules icy to improve a country’s motor vehicle stock. MVIMS are important and integral to MVIMS. is a standardized, digital platform that integrates Figure 4.4. Typical Structure of Motor Vehicle Information Management System (MVIMS) Licensing Inspection Registration MVIMS (VIMM) Enforcement Source: Original figure produced for this publication. MVIMSes need to play a central role in the MM sys- • Architecture that facilitates exchange of informa- tem of a country. As such, a mature MVIMS would tion seamlessly with upstream and downstream ideally have the following characteristics: users (both public and private), including customs agencies, PTI inspectors, traffic police, and motor • Architecture that guarantees security of informa- vehicle insurance providers; tion and protection from cybersecurity threats; • Ability to integrate data from other countries’ • Accessibility for different authorized users to be MVIMSes as needed, so that, for example, vehicle able to access the system to either deposit or records for imported secondhand vehicles from retrieve information in real time; the country of origin can be made available in 56 MOBILITY AND TRANSPORT CONNECTIVITY SERIES the importing country,3 or for traffic enforcement To streamline the remainder of the presentation purposes for vehicles being used outside of their of the MVIMS, we focus on the Vehicle Inspection home country of registration; Management Module (VIMM) to provide a concrete example of both how MVIMS can work and how it is a • Centralization of characteristics of the vehicle, key enabler for other MM implementation programs including make, model, model year, and trim of discussed later in this chapter. The primary objective the vehicle; fuel used; emissions control equip- of the VIMM is to help relevant stakeholders continu- ment and level it was originally certified to; fre- ously manage the inspection process throughout the quency and results of PTIs; vehicle odometer vehicle life cycle in compliance with vehicle perfor- readings at each PTI; structural and major com- mance standards. The VIMM consists of a collection ponentry modifications to the vehicle or its key of digital components to enable capturing, tracking, systems; or potentially other key elements iden- analysis, and dissemination of data related to vehi- tified in the 1958 or 1998 agreements under the cle inspection. It ensures timely and accurate data United Nations Economic Commission for Europe is captured and updated in a centralized repository. (UNECE) World Forum for Harmonization of It should also integrate seamlessly with the other Vehicle Regulations (WP.29); and modules in the MVIMS and contribute to enhancing efficiency of the inspection process. While facilitating • Ability to make anonymized data about the vehicle vehicle inspections that consider standard OEM sys- stock available in different formats and levels of tem features, the design of the VIMM should ensure aggregation so that unaffiliated researchers (for harmonized inspection procedures and data entry example, academia, MM observatories) can under- protocols administered across all inspection centers take quantitative policy analysis. in the country. Furthermore, it offers information and data for benchmarking and research purposes. In addition to the above characteristics, MVIMSes will need to recognize the potential for increasingly mod- A typical VIMM implementation consists of three ular construction of motor vehicles in the future as components: database, analytical tools, and citi- electrification, production mechanisms, and require- zen engagement, as illustrated in Figure 4.5, and ments for materials’ reuse and recycling consistent described further below. with the circular economy expand. For example, use of blockchain-enabled embedded tracking systems for particular parts and subcomponents may become more widespread in the future; MVIMS data architec- ture may need to adapt to these needs. 3 There is also a simultaneous and critical need to develop an international agreement on motor vehicle data sharing that establishes obligations for exporting and importing countries with regard to exchange of data, as well as establishing/formalizing data architecture protocols for such information exchange. 57 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Figure 4.5. Structure of Vehicle Inspection Management Module • First time, local/Imported vehicle inspection data Database • Periodic (e.g., annual) Vehicle inspection data Inspection Management Analytical MVIMS Module tools • Tracking, monitoring, benchmarking, trend analysis (VIMM) Citizen • Information dissemination, engagement search, online inspection services Source: Original figure produced for this publication. • Database: The VIMM database should be a repos- • Analytical Tools: This module within the VIMM itory of complete inspection data for all vehicles should consist of tools and applications that would actively operating on the roads. In addition to harvest the structured data stored in the VIMM containing the inspection data corresponding to database to help users of the VIMM track, monitor, first-time locally manufactured and assembled benchmark, and perform a wide range of analyt- vehicles, the database should be updated with ics on the inspection data. Besides generating a information coming out of periodic inspections variety of standard and customized reports for (for example, annual, biennial, etc.) as stipulated multiple stakeholders, the analytical tools should by the national inspection regime. In many coun- also compile a dashboard of compliance, gener- tries, all road vehicles are subjected to inspection ate alerts, and present enforcement trends taking carried out by an authorized government body into account the different parameters comprising before importation. The VIMM database should be the inspection regime. As an example, the analyt- designed to support the codification of a coun- ical tools could be used by relevant stakeholders try-specific regime for safety, fuel economy, and to generate reports on the number of vehicles environmental standards. Although this database that failed inspections and reasons for failure per could be implemented as a standalone repository, year, growth in the number of imported vehicles in situations where the design for a larger, more of a particular brand that failed emissions tests in comprehensive MVIMS exists already, it is recom- the first year, number of vehicles with inspection mended that the MVIMS database be utilized to defects or deficiencies that have subsequently incorporate features of that database. In terms been corrected per year, etc. Analytic tools can of storage of data, the VIMM could either have its also help to statistically identify vehicles that may dedicated archival area or could leverage the cen- have been subjected to odometer tampering. tralized storage used by MVIMS. 58 MOBILITY AND TRANSPORT CONNECTIVITY SERIES • Citizen Engagement: This public-facing module successful compliance. Consumers should not could be implemented as a website with a sup- only be able to search for inspection records but plemental mobile or smartphone app. This mod- also request inspection services online via the ule should form the bridge between the supply website or the app. Furthermore, this module side and demand sides of the inspection process. should incorporate grievance management fea- Through messages and explanations on inspec- tures as well to capture complaints and sugges- tion regime, standard procedures for inspec- tions from the consumers. tions, benefits of compliance, penalties for non- compliance, and via frequently asked questions, Users of the VIMM are identified based on the mod- this module should emphasize user awareness ules they would be most likely to use, as illustrated in and changes to consumer behavior required for Figure 4.6 below. Figure 4.6. Key Users of VIMM Module Inspection Inspection Centers Inspection Centers WAN Inspection Centers Inspection Centers centers Road transport authority, Database Inspection centers Vehicle Inspection MVIMS Management Analytical Module tools Transport authority, enforcement agencies, environmental agencies, (VIMM) research institutes, universities, etc. Citizen engagement Public, dealers, vehicle buyers, sellers, etc. Source: Original figure produced for this publication. 59 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY • Users of Database: The primary users of the data- Implementation agency of MVIMS and its sub-mod- base would include national and subnational road ules, like the VIMM, would vary according to the transport or road safety authorities, as well as the administrative structure of the country but would typ- operators of the inspection centers themselves. ically be carried out by the executive body assigned While road transport authorities responsible to oversee the transport services sector or road for first-time and annual or biennial inspections safety authority, if one exists. This may or may not would have the privileges to enter, modify, and be the same entity responsible for issuing drivers’ delete data, the authorized inspection centers licenses, but the systems should be designed to be would be able to only deposit and read data. In as integrated as possible. The participation of autho- case of imported vehicles, the authorities would rized inspection centers in the VIMM through digital also be responsible for uploading pre-shipment integration would, therefore, need to be mandated certificates and other related documents into the by the implementing agency. These authorized database. When inspection data is captured by inspection centers would need to be required to multiple authorized inspection centers, it would be deposit the inspection data accurately and in a timely advisable to consider a tight integration between manner, as required by the VIMM architecture, as inspection centers and the central repository for part of the authorization process or when the per- the VIMM so that the data captured by the geo- mits/licenses are issued to the inspection centers. graphically dispersed centers could be exchanged digitally and in real time with the central database Governance of the information in the various MVIMS thereby ensuring data integrity. components is of critical importance and should be established considering the various departments • Users of Analytical Tools: This module in the VIMM that may access and use the information. A robust would typically be used by the transport or road governance protocol is required to ensure the safety authority, inspection enforcement agencies, inspection workflow is managed unambiguously traffic police, environmental agencies, research and that the roles of different actors in the system institutes, universities, and other stakeholders that are defined clearly for data inputs, analysis, infor- might be interested in the vehicular inspection mation security, reporting, and decision-making data. One of the ways in which the enforcement (that is, a role-based access policy). The governance agency could utilize this tool would be to identify mechanism should include standard operating vehicles delinquent on inspections and those that procedures and protocols to manage the privileges have failed inspections but are still operating on to access, create, modify, or delete data. The vari- the roadways. ous MVIMS platforms, through their user interfaces should enable the primary custodian of the system to • Users of Citizen Engagement: The primary purpose administer the governance effectively. of implementing this module is to inform consum- ers about the ecosystem of vehicle inspection with a view to changing consumer behavior toward compliance. The key users of this module will be the driving public, vehicle dealers and importers, and vehicle buyers and sellers. 60 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Certification/homologation systems Certification of vehicles for addition to the national nonconforming vehicles will need to be shipped vehicle stock can refer to either import certification or back or disposed of at public cost. Development production homologation/certification, depending on of international agreements that put the burden how the vehicle enters the stock. As noted above, we on exporting countries to control or manage the estimate that for 70 percent of low- and middle-in- quality of vehicles exported to developing coun- come countries, importation of previously used vehi- tries might help this process of certification by cles outstrips that of new vehicles, and newly added requiring developed countries to share some of vehicles are predominantly imported rather than the regulatory burden. produced or assembled locally; import certification is, therefore, a critical process to protect the integrity of • Who carries out frontline checks? Certification of the stock under an MM posture. vehicles for import (or export) is usually carried out by private companies in contract to a regula- Import certification is the process whereby vehicles tory agency. In Kenya, for example, the company imported to the country are assessed for conformity Quality Inspection Services Japan (QISJ) carries out to entry thresholds. If the country has adopted pol- inspections in Japan through a contract with the icies to incentivize vehicle purchase choices on the Kenya Bureau of Standards. How those inspec- basis of particular characteristics, such as fuel econ- tion contracts are procured, how frequently, and omy, import certification is also the process whereby under what conditions, and how those contracts those characteristics are verified for the particular are overseen by regulatory agencies, are critically vehicle in question or relevant values assigned to it. important considerations and fraught with oppor- Import certification applies to new and used vehicles, tunities for corruption. as well as to CKD or semi-knock down (SKD) assembly kits, though the requirements for each might differ. • How is fraud managed? In most certification sys- Processes for import certification of vehicles can vary tems, paperwork to demonstrate conformity with substantially among countries. Key variants affecting the country’s import requirements is subject to 100 the design of an import certification process include percent check. Clearly, however, some proportion the following: of the vehicles will not conform to what is shown in the paperwork as a result of attempted fraud. The • Where does certification occur? Certification can objective of any import certification system, there- occur at the point of export or import, or both. fore, is to minimize the proportion of vehicles with Kenya, for example, contracts with a private com- fraudulent papers that are ultimately accepted for pany to undertake pre-export inspections, but entry, while also minimizing import-process-re- it has latitude to do so since more than 90 per- lated costs. Many countries consider 100 percent cent of vehicle imports into Kenya come from a physical inspection of all vehicles at both export single country, Japan. Where import sources are and import to be too costly for consumers, so more diversified, quality (and fraud) control in designing a system that has enough randomized pre-export inspections becomes more difficult physical inspections and substantial enough puni- to manage. However, inspections at import car- tive damages when fraud is discovered to deter ries a certain risk for the importing countries that efforts at fraud is the critical challenge. 61 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY As a good practice example, New Zealand maintains is to determine whether characteristics of the vehi- some of the most stringent vehicle emissions and cle itself would make it ineligible for import. These safety standards in the world, proven by its road might include whether, at manufacture, it met the safety statistics. It no longer has a domestic vehicle crashworthiness requirements currently required for manufacturing industry. The vast majority of vehicles import, whether it has necessary emissions control in New Zealand are imported from Japan. Box 4.1. and crash avoidance equipment currently required discusses the key features of New Zealand’s vehicle for import (including whether the equipment is func- imports certification process. tional), and whether there has been irreparable struc- tural damage or alteration to the vehicle that renders Notwithstanding the perceived cost of two-stage it ineligible to be deemed roadworthy. The main inspections, the Brussels-based International Motor objective of the inspection at import is to determine Vehicle Inspection Committee (CITA) recommends whether there has been damage or tampering to the a two-stage entry certification process, similar to vehicle during shipping, and what repairs might be that carried out in New Zealand, consisting of a first needed prior to issuance of a roadworthiness certifi- stage done in the country of export (pre-shipping) cate. We believe that this two-stage import certifica- and the second done at import (post-shipping). The tion process represents best practice. main objective of the inspection at the export end 62 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Box 4.1. New Zealand’s Vehicle Import Certification Process New Zealand provides an interesting case study of a country without a domestic automobile manufac- turing industry that, nevertheless, effectively manages both vehicle safety and fuel efficiency improve- ments. New Zealand does not have a major domestic vehicle manufacturing industry and relies heavily on the import of vehicles, primarily from Japan, Australia, and the United Kingdom. About 50 percent share of New Zealand’s imported vehicles are light-duty vehicles (LDVs) and it has one of the safest fleet ratings regarding crashworthiness. New Zealand Transport Agency (NZTA) has set up the import standards for all categories of vehicles. The two key features of New Zealand’s vehicle import regime of note are extensive reference to other countries’ vehicle standards in its own legal codes, and an importation process centered around entry certification, known locally as “compliance.” The set of crashworthiness standards approved by NZTA refer specifically to the frontal impact test performance. The approved standards include: • Directive 96/79/EC of the European Parliament and of the Council of 16 December 1996 on the protection of occupants of motor vehicles in the event of a frontal impact; • UN/ECE Regulation No. 94 Uniform provisions concerning the approval of vehicles with regard to the protection of the occupants in the event of a frontal collision; • Federal Motor Vehicle Safety Standard No. 208, Occupant Crash Protection in Passenger Cars, Multipurpose Passenger Vehicles, Trucks and Buses; • Australian Design Rule 69, Full Frontal Impact Occupant Protection; • Australian Design Rule 73, Offset Frontal Impact Protection; and • Technical Standard for Occupant Protection in Frontal Collision (Japan). New Zealand has also put in place a mandatory vehicle efficiency labeling requirement for both new and used imported vehicles, with an exception for electric vehicles (EVs). The label design is the same for both new and used imports. However, the used import label only includes the star-based rating (up to six stars) and not a fuel economy value. New Zealand has developed an algorithm to translate efficiency ratings from the various exporting markets into its star rating. Consequently, it does not test vehicles directly for fuel economy, but it does audit the documentation provided for new vehicle imports and compares it to international databases. A number of dealers are visited every year to ensure labels are properly displayed on vehicles. 63 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Vehicle importation in New Zealand is built around a myriad of requirements depending on the coun- try of manufacture and the year of production of the vehicle. Entry certifiers carry out both document inspection—to ensure compliance with these requirements—and physical inspection to determine the condition of the vehicle with respect to rust, previous structural repairs, structural damage, brakes, emissions, and seat belts/seat belt anchorages, among other things. Repairs, if necessary, are carried out and certified by third and fourth parties to ensure integrity of the process. After passing docu- ment and physical inspection, the entry certifier issues a Warrant of Fitness, which is required to regis- ter the vehicle. New Zealand also contracts with a company in Japan to undertake pre-export inspections. In this respect, New Zealand enforces a two-stage inspection process. In addition, all sales of secondhand vehicles in Japan are brokered through public auction processes, for which a detailed auction inspec- tion sheet, made available to the public before bidding, is required. In this sense, Japanese cars exported to New Zealand are inspected at least three times before being allowed to be registered for use in New Zealand. Image B4.1.1. Inspection Facility for Newly Arriving Used Vehicles in Wellington, New Zealand Source: Vehicle Testing New Zealand Ltd. Source: World Bank and New Zealand Transport Agency website. 64 MOBILITY AND TRANSPORT CONNECTIVITY SERIES For vehicles that are fully or substantially manu- owner. For the purpose of exposition here, however, factured domestically in the country, a two-stage these are discussed separately. production certification process is commonly used, consisting of Type Approval (TA) and Conformity of Inspection for emissions Production (COP)/Homologation. TA is the procedure by which each vehicle type produced for a particu- ICE vehicles will emit gaseous and particulate pollut- lar market is determined to meet all the technical ants that harm human health and have other del- and administrative requirements established in a eterious environmental effects. Consequently, PTI given regulatory regime that is in place. The 1958 programs to monitor emissions are recommended agreement under WP.29 of the UNECE governs the to be in effect as long as ICE vehicles are used to definition of a vehicle “type” internationally. COP is ensure compliance with health and environmental a related process that confirms that each vehicle is standards. However, a good PTI program for emis- manufactured in accordance with approved specifi- sions is not intended to verify whether an in-use cations. Presence of a quality-management system, vehicle is meeting a particular emission standard, such as ISO 9001, often suffices to demonstrate COP. but rather to check whether it is exceeding a certain For many developing countries with nascent auto- threshold (Posada, Yang, and Muncrief 2015; Yang, motive manufacturing industries, existing TA-COP Qiu, and Muncrief 2015). This distinction is import- arrangements in developed countries may be suffi- ant because the way a PTI program for emissions cient in the short run to manage the volume of vehi- is established and the parameters that define it are cles being produced. However, COP processes may quite distinct from those of a program designed to need to be designed and introduced to ensure quality filter vehicles coming into a country’s vehicle stock for of CKD and SKD assembly in particular. the first time. In a country with metropolitan areas with acute air pollution problems (for example, ozone Periodic Technical Inspection or particulate smog), the objective of a PTI program targeting vehicle emissions might be to continuously PTI is a set of requirements designed to ensure that get 5 percent to 10 percent of the dirtiest vehicles in-use vehicles are properly maintained and kept in (with respect to the pollutant of interest) either fixed good working order by vehicle owners or leasehold- or permanently off the road. This means: (1) identi- ers.4 The main goal of a PTI program is to identify fying an appropriate emissions testing protocol that the dirtiest and most hazardous vehicles—that is, is meaningful and implementable in the country in the ones that represent the greatest threat to pub- question, and (2) continuously assessing emissions lic health—and to either get those vehicles repaired performance of the fleet, and resetting thresholds or get them out of circulation. Inspections relate to to cover the worst performing 5 percent to 10 per- emissions and roadworthiness, and these are often cent, rather than setting and monitoring for a given done separately. In some jurisdictions, these may be technology standard (like Euro 4) per se. In this carried out by separate entities, and even in differ- understanding, the “failure rate” of vehicles under ent locations. An ideal system of PTI, however, will be an inspection regime is not an indicator of the per- designed so that these inspections are carried out formance of the vehicle stock in a given area; it is, at the same time, and made seamless for the vehicle rather, a policy target. 4 This report adopts the nomenclature “periodic technical inspection” to refer to any required recurring technical inspection program for vehicles registered for use on public roads to ensure that the vehicle meets safety roadworthiness, and vehicle emissions verify fitness. In this report, we do not adhere to the common nomencla- ture referring to “inspection and maintenance” programs—that is, inspection to check pollution emissions control systems—separately from inspection for vehicle fitness for road safety purposes. From the standpoint of creating or strengthening inspection regimes that provide maximum convenience for vehicle owners and operators, integration of these two aspects of vehicle inspection as much as possible is important. The nomenclature adopted in this report, referring to both under the rubric “periodic technical inspection,” is intended to support this concept. 65 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Best practice cases from around the world point to established, will need to be set in a manner that the need to separate emissions testing from vehicle ensures that a manageable number of vehi- repair, with the former centralized in high-through- cles—for example, the dirtiest 10 percent to 15 put facilities that can be readily monitored through percent—are targeted in any given year. Having both visual and electronic means. This minimizes the detailed, local, empirical data is critical to this opportunities for corruption and facilitates invest- objective. ment in advanced emissions control testing equip- ment, if required (Walsh 2005; Fabian and Bosu 2012). The two key characteristics that should define PTI program design to address emissions are the evolv- Any PTI program for vehicle emissions should be ing nature of the vehicle fleet—what will be the oriented toward targeting, as quickly as possible, the predominant level of emissions control equipment in vehicles that cause the biggest harm. This means the urban fleet in the next five years, what proportion developing empirical data on the following: will be compliant with ISO 15765 (OBD2), and what proportion will be petrol, diesel, or other?—and the • Ambient air quality. Key air quality problems nature of the ambient air quality pollution problem should be documented in order to have an evi- being faced, which is best identified through ambi- dence base about which pollutants should be tar- ent air quality and source-apportionment studies. geted, in which order. For example, it is important The answer to these two key questions should deter- to understand whether addressing tropospheric mine what kinds of testing protocol and frequency ozone should be an important target in a vehicle are required for each vehicle. A poorly specified PTI inspection program, and, if so, whether focusing program for emissions control that is not designed on non-methane hydrocarbons (NMHCs) or oxides around these local characteristics (for example, bor- of nitrogen (NOx) would be a more effective rowed from other locales without adequate analysis strategy. The answers to such questions can only of local circumstances) is at high risk of either being be determined through empirical data collected ineffective or facilitating investment in rapidly obso- locally in an ambient air quality monitoring pro- lescing technologies relative to the way the vehicle gram. That said, international experience sug- fleet is evolving. In other words, poorly designed PTI gests that particulate matter (PM10 and PM2.5) is a programs may result in stranded assets. chronic and serious public health challenge in cit- ies, particularly but not only where there is a high Inspection centers themselves should be desig- predominance of diesel vehicle use. So, efforts to nated by the relevant government authority through control PM emissions may be a worthwhile early a well-established, transparent, and predictable investment even while a local empirical database process. Where the capacity of this government is under development. authority is weak, efforts should be taken to limit the number of different inspection entities that require • Emissions database development. At least two oversight. The approval of government authorized years of vehicle emissions data, gathered from inspection centers should also extend to equipment mandatory vehicle emissions inspections, should used for inspection to be certified by an authorized be compiled before emissions limitations are body and certified training for personnel using established. These limitations, when they are the equipment and involved in the issuance of the 66 MOBILITY AND TRANSPORT CONNECTIVITY SERIES certificate. It is important that the prohibition of the the inspection schedule may also apply to vehicles vehicle be clearly marked and categorized as immedi- involved in tow-away crashes and random on-roads ate or delayed in case the vehicle shall be deemed for inspections. repair at the cost of the owner. Without a Certificate of Performance, the vehicle should be denied renewal Technical inspection for road safety is governed of registration, road license, or insurance coverage, internationally through the 1997 agreement of and further penalized if found to be operating during the World Forum for Harmonization of Vehicle random on-road inspections. Regulations (WP.29) of the UNECE.5 Best practice shows that vehicle safety testing protocol should aim Inspection for safety to cover, at a minimum, the following aspects of vehi- cle safety features: PTI for safety should ensure that all vehicles adhere • Tire condition and minimum permissible thread to a minimum standard of safety performance while depth; under operation. This usually entails, among other things, subjecting vehicles to a standardized testing • Brake condition and operation; protocol either as a separate process from emissions inspections, or as a single process. Vehicles newly • Structural conditions (including corrosion and accepted for entry into the national vehicle stock rusting); (either imported or locally assembled) need not be • Certificate of loading and load restraints (load subjected to the testing protocol at the time of regis- anchorages, towing connections); tration if they will be subjected to regular inspection once under operation as part of the current fleet. This • Lighting (headlamps, brake lights, turning indica- applies to all categories of motorized vehicles, includ- tors, reflectors as applicable); ing passenger cars (sedans, sport utility vehicles), • Glazing (windscreen and wiper condition); heavy vehicles (trucks, larger trailers), and passenger service vehicles (taxis, shuttles, buses). Compliance • Door operations and locking mechanisms; with vehicle testing protocols may be ensured with the issuance of a Certificate of Performance, which • Safety belts and buckle/anchorage system; must be produced by the vehicle owner or vehicle • Airbag operations, if fitted; dealership during import registration or the annual inspection process. It is, therefore, the responsi- • Speedometer and odometer check; bility of the vehicle owner, even during the pre-im- • Steering and suspension; and port stage, to ensure the vehicle complies with the Certificate of Performance. For road safety objectives, • Fuel system integrity. the maximum inspection interval is one year after the first registration (or if the vehicle is not required to Development of specific vehicle testing protocols in be registered, date of first use) and annually thereaf- these areas should aim to harmonize country-specific ter, as recommended by the United Nations. Further, requirements with those of the WP.29, and countries 5 Agreement Concerning the Adoption of Uniform Conditions for Periodical Technical Inspections of Wheeled Vehicles and the Reciprocal Recognition of Such Inspections. 67 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY that are not contracting parties to the 1997 conven- oversight and governance capacity are likely lim- tion should consider membership as it allows recip- ited. Decentralized inspection, to meet the conve- rocal recognition of inspection certificates from other nience of vehicle owners, might evolve over time, member countries. but only if the oversight and governance capacity of the regulatory authority is sufficient to manage Structure of vehicle inspection systems that decentralization. In many countries, vehicle emissions inspection sys- • Metropolitan areas with or susceptible to bad air tems evolve out of an older system for vehicle safety pollution should require PTI for emissions along inspections, which tends to be more dependent on with PTI for roadworthiness. The way the national labor than machinery. As a result, there is a risk that system is structured, however, needs to ensure nascent PTI for emissions follow a model of decen- that cars not inspected in metropolitan facilities tralized inspection at small facilities that do main- with emissions requirements are not allowed to tenance as well as inspection. As previously noted, regularly operate in metropolitan areas. numerous experts (ADB 2003; Walsh 2005; Fabian and Bosu 2012) have concluded that emissions • Centralized (test-only) facilities should be operated inspection systems are more effective and cost-effi- by appropriately constituted and organized enti- cient when they are carried out by centralized, test- ties (for example, public or private) using Public only facilities focused on high vehicle throughput, Service Contracts (PSCs)—that is, a public or pri- with separation of the test from the repair function. vate company would operate the facility on con- In addition, for countries with weak institutional tract to the responsible department. These facili- capacity, it is easier to oversee and manage a few ties could either be built by the public sector and large facilities or operations than many small ones. then leased out to the operator under the PSC, or Centralized facilities also have a greater ability to else developed under a public-private partnership invest in the latest and most technically advanced (PPP) model such as Build-Operate-Transfer (BOT). equipment, and the separation of testing from repair and servicing typically associated with centralized test The above is intended only to define general princi- facilities means there is less susceptibility to corrup- ples; the actual structure of a PTI system, both as fully tion. However, centralized test facilities can be seen mature and in terms of how it should evolve from the as an inconvenience by motorists. legacy system, should be developed through a more detailed study. In practice, the structure of a PTI system will depend on country-specific circumstances, shaped by legal The regulatory agency overseeing the vehicle inspec- and regulatory authority provided in the country, tion system—to which the entity carrying out the and the legacy system(s) from which the PTI system actual inspections under the PSC would be con- evolves. But an effective PTI system should aspire to tracted—would have a number of responsibilities the following characteristics: and mandates for which capacity would need to be developed or strengthened. First, it would need to • PTI should be carried out in centralized facilities develop the regulatory capacity, decentralized into in most low- and middle-income countries, where field offices as appropriate, to be able to administer 68 MOBILITY AND TRANSPORT CONNECTIVITY SERIES a system of licenses and/or PSCs, including capacity Visual enforcement to carry out snap inspections and facilitate enforce- ment actions as appropriate. Second, it would need Public spotter programs encourage and enable the to ensure that the necessary protocols and data pro- public to report the license plate of vehicles with visi- tection measures are developed to enable access to ble smoke from their tailpipes. Although the breadth the MVIMS by the vehicle inspection industry. Third, of intervention is limited to smoking vehicles, these as the custodian of a great deal of operational data programs are relatively easy to set up and have low related to vehicles, it would need to develop the nec- operation costs. Successful implementation requires essary capacity to exploit and utilize that data pro- active program promotion to ensure high awareness, ductively. This may mean development of in-house easy reporting methods, and follow-up with reported capability to analyze data, but it might also mean vehicles. The program requires a database that links development of standing protocols or memoranda vehicle license plate to owners and contact informa- of understanding (MOUs) with academia to produce tion (phone and address). It also relies on an existing regular analyses of data for public policy develop- system of inspection and maintenance centers. Once ment. Such useful data that could be collected would a vehicle is reported, authorities should contact the include profiles of the fleet; profiles of fleet usage owner and ensure the vehicle is tested and repaired (through collection of odometer readings); identifica- before it is once more allowed to ply the roads. tion of anomalies that may indicate fraudulent behav- ior, such as odometer rolling; profiles of empirical Hong Kong and cities in Guangdong Province, China, emissions rates to identify gross emitters; and many have ongoing public spotter programs. Hong Kong other possible applications. was particularly successful in ensuring public partic- ipation by recruiting and training citizen volunteers. On-road enforcement Guangdong rewards those that have reported vehi- cles that are confirmed to be gross emitters. For Periodic testing of vehicles under a mandatory PTI both programs there are a variety of ways to report program is a necessary, but insufficient, condition to vehicles by phone or through a website, email, and ensure compliance with requirements to maintain mail. A text message option offered in Guangzhou, ICE vehicles in acceptable conditions to be allowed the capital of Guangdong Province, would have wide to circulate. As a stand-alone program, PTIs are too applicability in regions where cell phone ownership prone to fraud and corruption to be an effective is high. Follow through is critical and these programs instrument; they need to be supplemented with consistently ensure vehicle owners are tracked down effective on-road enforcement. On-road enforcement and the vehicle is tested and repaired as needed. programs can be useful both to ensure that motor- ists and inspectors are complying with the law, and Spot-checking programs are carried out by teams to gauge the overall quality and effectiveness of a of officials, often pairing police or others with law PTI program. Such enforcement needs strong, visi- enforcement authority with technical specialists ble, and consistent parameters and protocols across trained to identify vehicles with potentially high jurisdictions to be effective and credible. We discuss emissions and conduct roadside testing. These pro- visual and instrument-aided on-road enforcement grams are meant to complement inspection and programs in this section. maintenance programs by providing more targeted 69 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY selection of vehicles. Spot-checking programs are vehicles, one option is the lower-cost two-speed idle often set up in locations where high-emitting vehi- test, an unloaded test that was developed for car- cles are likely to be found, such as parking lots, bus bureted engines. However, this test is less effective stations, and motorway exit ramps. As with public with today’s electronically controlled engines. The spotter programs, successful implementation is con- Acceleration Simulation Mode (ASM), a loaded test tingent on not only identifying high emitters but also where the vehicle is driven on a treadmill-like appara- ensuring vehicles are repaired and retested before tus that replaced unloaded tests in many inspection they are allowed to operate. Data on what vehicle and maintenance programs, has also been applied to makes and models have higher rates of noncompli- roadside tests, notably in California. For diesel vehi- ance can be used to target roadside inspection. Spot- cles, the free acceleration smoke (FAS) or snap-idle checking programs are also a good complement to smoke test measures the exhaust opacity at full open remote sensing programs. throttle. The test has simple equipment and setup requirements, which makes it easy to incorporate in Instrument-aided enforcement instrumented spot-check programs. Although this test is useful for detecting serious malfunctions, like Both loaded and unloaded tests can be carried out on the two-speed idle test, the results are often variable the roadside (see, for example, Box 4.2. on Morocco’s and poorly correlated to PM emissions, limiting its use of roadside testing), but the costs and equip- usefulness to identifying vehicles with gross defects. ment requirements vary. For light-duty gasoline 70 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Box 4.2. Use of On-Road Testing in Morocco Morocco has implemented a program of on-road testing using mobile units equipped with tech- nical control equipment. Three mobile units are operated by the National Center for Testing and Homologation (CNEH) to monitor vehicles leaving periodic technical inspection (PTI) testing centers. These inspections make it possible to check the condition of the vehicles and to audit the technical control centers and ensure compliance with the control procedures. For the control operation, the CNEH also checks the accuracy of the measurements collected by the technical equipment of the audited center. These operations indicate the quality of maintenance and compliance with the calibra- tion of technical equipment. Image B.4.2.1. Mobile Testing Unit Performing Validation Check Outside a PTI Testing Center in Casablanca, Morocco Source: Abdellilah Khalifi. Source: World Bank. 71 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY New testing options, such as onboard diagnostics identify both vehicle types that should be targeted for (OBD) and remote sensing, are providing promising detailed screening, and how effectively a PTI program alternatives to current roadside testing approaches. is catching gross emitters over time. Much of the OBD systems monitor the performance of engine and remote sensing deployments to date have focused emissions control systems, alert the driver about sys- on LDVs, but feasibility for HDVs has been demon- tem malfunctions, and store information that can be strated. Success factors for the use of remote sensing accessed by service providers to diagnose malfunc- as an approach to reduce in-use vehicle emissions tions. OBD systems are currently installed in all new include optimizing the location and density of the cars and most new trucks in the United States, the system, establishing limits that can be enforced, and EU, Japan, the Republic of Korea, and China; however, following up on detected high emissions. As with system requirements in these markets vary. Several public spotting programs, an accurate and regularly jurisdictions in the United States use OBD testing updated database connecting the license plate to as the primary inspection and maintenance test for the owner of the vehicle is a prerequisite for remote newer cars. The use of HDV OBD in truck inspec- sensing as a compliance enforcement tool. tion and maintenance is currently limited. The data Further, to be effective, on-road enforcement tech- stored by the OBD system can be accessed during niques, such as those discussed in this section, need spot-checking stops using an OBD scan tool, elim- to be prevalent enough that motorists perceive a inating the need for an actual emissions test. This reasonable chance of being caught in an enforce- approach’s success is contingent on OBD regulations ment action, and the consequences dire enough that requiring permanent storage of diagnostics trouble they consider having their vehicle out of compliance codes (DTC) until adequate repairs are made and as a high risk. For these reasons, their use should be other requirements to limit tampering. For markets programmed as a continual activity, particularly in where multiple standards exist, the lack of a stan- metropolitan areas with air quality challenges. dardized protocol may limit near-term feasibility. OBD systems could be hacked and provisioned with Fuel quality assurance mechanisms defeat devices, however, so extensive use of monitor- ing OBD as a way of examining emissions should also There are many reasons to include fuel quality assur- be accompanied by measures to detect the preva- ance in a broader program of MM. In countries lence of illegal OBD modification. with porous borders, situated in regions where fuel standards are not harmonized and substantial vari- Remote sensing devices (RSDs) use a light beam ation of fuel quality and prices exists, there may be directed at the exhaust of a vehicle that is passing by strong economic incentives to smuggle and distrib- to detect the amount of pollutants emitted and the ute lower-quality fuels into countries where they may vehicle’s speed and acceleration. At the same time, a do substantial damage to vehicle emissions control camera takes a picture of the vehicle’s license plate systems. Even within individual countries, there can to link the vehicle to its owners. These systems have be strong economic incentives to adulterate fuels been primarily deployed to research fleet-level emis- if there are big enough price differentials between sion characteristics, verify the real-world effectiveness them and consumers are unaware of the adultera- of emission programs, and identify high emitters. tion or the damage it can cause at the time of the fuel It is primarily seen as a complement to PTI helping purchase. In many countries, adulteration takes the 72 MOBILITY AND TRANSPORT CONNECTIVITY SERIES form of mixing kerosene with gasoline or diesel. In A 2011 working paper by the International Council on Ethiopia, for example, taxes on kerosene were lower Clean Transportation (ICCT) surveyed best practices than taxes on other hydrocarbons through 2017 in in fuel compliance programs. It found several themes order to provide a price incentive for low-income in common. First, a combination of upstream testing households to use kerosene, rather than biomass, (for example, at import facilities) and downstream for household cooking and space heating. The result- quality checks (for example, at retail stations) should ing unintended incentive to adulterate gasoline and be used. Second, presumptive liability is an effec- diesel with kerosene resulted in a perverse effect of tive concept to be applied, putting “the onus on fuel making kerosene scarcer for low-income households suppliers to deter fuel contamination and the mix- than it otherwise would have been had taxation rates ing of low-quality fuel along the distribution chain.” been equal with other hydrocarbons. For this reason, Third, prohibitive noncompliance penalties should be the tax differential was eliminated in 2017. applied to fuel suppliers. Fourth, both financial and criminal penalties can be leveraged against suppliers. As with other parts of the automotive value chain, Finally, the threat of reputational damage is a power- informality in the gasoline and diesel supply chain is ful disincentive (Fung 2011). prevalent in many countries and can be a challenge for oversight of the adequacy of fuel quality. Mbaye Fuel marking is one strategy that has proven some- et al. (2020) identify automotive fuel supply as a key what effective in fuel quality assurance. Fuel mark- sector in which competition between formal and ing involves placing markers in fuels (such as dyes informal sectors in West Africa predominate. They or other markers) at the point of introduction of a report that 73 percent of petroleum products by vol- refined fuel product into the supply chain. In Kenya, ume in Benin are available through informal vendors. for example, the government successfully brought Many of these products in Benin, Cameroon, and down the percentage of failing fuel stations from a other countries in West Africa are smuggled from high of about 20 percent to 2 percent through an Nigeria and are known to be blended and adulterated effective program of fuel marking and other comple- in the process (Aliyou, Houssou, and Attisso 2013). mentary measures in 2017 (Oimeke 2020). The suc- cess of fuel marking and testing relies on long-term Infiltration of impurities is another reason that fuel collaborative commitments by a number of govern- quality testing is critically important. Where fuel stor- ment agencies, including the departments of energy, age systems are structurally weak, water and other finance, customs, transport, and law enforcement. In impurities can infiltrate fuel at storage, particularly in the case of Kenya, the Energy Regulatory Authority instances of heavy rain or flooding. Infiltration of rain (ERA) has the initial authority and responsibility in and groundwater into fuels can degrade motor vehicle regulating fuel quality. ERA has contracted with a pri- performance, but it can also be an indicator of other vate company to bio mark all fuel exports and domes- serious environmental consequences. If water can tic kerosene at distribution and carry out random infiltrate fuel tanks, then there is a high likelihood that sampling to ensure that exported fuel is not dumped fuel can leach into surrounding groundwater as well. back into the country, and that fuel adulteration is 73 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY curbed. The Kenya program also uses a “name-and- one would expect there to be a range of intermedi- shame” approach; the names of fuel stations that are ate services between the extremes described below, found to have either adulterated or dumped fuel are but there are examples, such as Ethiopia, where such published in the local newspapers two months prior. intermediate services do not exist. As a result, many retail station owners have procured and regularly utilize self-testing equipment to check On the one end of the spectrum, OEMs, such as that all fuel deliveries to their stations are in accor- Toyota or General Motors, maintain training facili- dance with the required standards. ties and dealer-based maintenance shops in order to provide after-market services to customers, as well as Oversight and development of preventive provide purchased services to the general public. Such maintenance and repair industry services would often be too expensive for most vehicle owners and operators, commercial and noncommer- In many developing countries, current maintenance cial alike, but desirable as a premium service where practices can be observed as falling into two sepa- quality is guaranteed, for those who can afford it. rate industrial “ecosystems” for vehicle maintenance; Image 4.1. Toyota Vehicle Service Repair Center in Addis Ababa, Ethiopia, in 2016 Source: Henry Kamau. 74 MOBILITY AND TRANSPORT CONNECTIVITY SERIES On the other end of the spectrum, artisanal mechan- Yaw Obeng 2002), how to professionalize it (Iddrisu, ics provide services on an informal and unlicensed Mano, and Sonobe 2011; Elguera et al. 2020), or how basis, often in roadside shops. The size of this infor- to improve its productivity and manage innovation mal service provision is probably substantial in many (Kawooya 2014). countries. Murthy (2019), for example, estimated that in India, in 2017, 86.6 percent of gross value added Notwithstanding their advantages in meeting demand (GVA) output of trade, repair, accommodation, and for services in income-constrained environments, food services was informal, the highest of any indus- small-scale, informal preventive maintenance and try sector group except agriculture, forestry, and fish- repair operations are associated with a number of ing. In many countries, these services are often, but challenging problems. They have notoriously poor not always, clustered in artisanal industrial areas in hazardous waste control (Rodríguez, Carriel, and large cities or at important transport junctions in the Gavilanes 2012; Oloruntoba and Ogunbunmi 2020) national road network. Well-known examples of such and occupational health practices (Monney et al. 2014; clustering include Suame Magazine in Kumasi, Ghana, Amfo-Otu 2016). And the very informality of the sector or Jua Kali Thika in Nairobi metropolitan area, Kenya.6 has made it challenging to professionalize and make These services tend to be used by lower-income vehi- more productive (McCormick 1999; Yaw Obeng 2002; cle owners generally, and the minibus taxi industry Iddrisu, Mano, and Sonobe 2011; Kawooya 2014). in cities, or man-and-his-truck style operations for freight, in particular. These types of operations offer In developed regions, too, like the United States and consumers inexpensive services because of the low the EU, the automotive repair and service sector is cost of labor and lack of debt burden associated with bifurcated between large operations owned or affil- capital investment (and, often, formal rent). They iated with OEMs and small, independent businesses are important sources of labor growth for rapidly characterized as small and medium enterprises urbanizing areas and for semi-skilled and skilled (SMEs), even if these latter are “formal” rather than laborers, as well as entrepreneurial microenterprises informal. Even so, there appears to be consensus (McCormick 1999). In addition, in cities where motor- among industry analysts that in the coming few years ization is increasing at a faster rate than the formal this sector is about to undergo a period of rapid and automobile aftermarket service sector, artisanal substantial change, driven by disruptions associated mechanics fill a critical niche (Elguera et al. 2020). with digital technology (Deloitte China 2013; Kempf Skills are developed not through formal training but et al. 2018; Quantalyse and Schönenberger Advisory through apprenticeship and on-the-job learning. Services 2019). Change resulting from this disrup- tion would likely include consolidation among parts There is vibrant academic literature on informal distributors, aggressive expansion of OEMs into sector industrial clusters in low- and middle-income aftermarket activities, digitization of channels and country settings, too numerous to review here. Much interfaces, access to car-generated data, increasing of the literature focuses on explaining the structure influence of (digital) intermediaries, greater price of the sector and how it operates (McCormick 1999; transparency, and greater diversity of supply for 6 Jua Kali is Swahili for “under the hot sun” and is used to describe many different types of street-based businesses. 75 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY customers in the near term. Analysts also point to countries is, therefore, a question of importance not the electrification of drivetrains, the emergence of only for decarbonization, but also for labor markets. Mobility as a Service (MaaS), and autonomous driv- ing as additional disruptive factors driving industry It is important to highlight that, because these tech- changes in the longer run. nology transitions are driven by external trends, countries reliant on secondhand vehicles cannot These trends signal particularly significant chal- avoid the use of increasingly complex technology, lenges for the automotive preventive maintenance even if they have no country-specific mandate to use and repair sectors in low- and middle-income coun- them. This is also the case for imports of second- tries. First, the technologies that are increasingly hand EVs and the required charging infrastructure. important to improve the safety and environmental As a consequence, the maintenance industry in both performance of ICE-powered vehicles are getting ecosystems needs to be capacitated to manage them. more complex, requiring increasingly comprehen- The long-term solution is to foster development of sive and frequent knowledge transfer than a tradi- the human capital of the automotive repair industry. tional system of apprenticeship can provide. That Particular attention should be paid to the low-end is, the sophistication of the technologies frequently licensed mechanics’ shops that can vie competitively outstrips the knowledge of the “master” in the mas- with—and absorb labor from—the informal firms, ter-apprentice relationship. In the conventional Jua with services that may be more expensive than the Kali culture, this can produce two harmful responses. cut-rate prices offered by the informal sector, but First, technicians may simply deactivate or disengage still affordable for most vehicle owners and opera- those technologies that they either do not under- tors, and with reasonable quality controls. Informal stand or do not have the skills to service (Mairura and firms can also be encouraged to professionalize not Osoro 2015), and it may cause some providers to exit only through vocational training but also training for the market (Akuh and Agyeman 2019). The infor- effective marketing, management, and accounting, as mal nature of the sector in many countries makes well as use of enhanced IT platforms (Iddrisu, Mano, the development and targeting of vocational train- and Sonobe 2011; Elguera et al. 2020). ing challenging. Second, as high-income countries increasingly move to transition their fleets away from At the same time, OEMs with maintenance training ICE vehicles and toward battery electric (and, subse- facilities or programs should be coaxed through dia- quently, hydrogen) vehicles, more and more of this logue and perhaps incentives into providing training technology will begin coming into low- and middle-in- for the industry as a whole, not just for their own come countries. These technologies will not only branded dealers. What form this ultimately takes require a different skill mix from what is required would be determined by the outcome of that dia- in the automotive aftermarket sector currently, but logue. For example, the dialogue could result in PPP also they would likely be less labor intensive. In other models to develop for-profit training centers. The words, automotive maintenance will become more content of such engagement could include not only digitalized, requiring a different set of skills and lower curriculum development and facilitate trainings, but levels of labor than currently required. How fast also the regulatory, permitting, and credentialing this transition happens in low- and middle-income structure necessary for a modern repair industry. 76 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Oversight and quality assurance of vehicle implement the regulatory framework to address the parts production, acquisition, and distribution outstanding issues in the spare parts supply chain and create a better business environment to enable In many developing countries, the automotive after- legitimate parts suppliers and distributors to survive, sales industry has become a critical factor not only in compete, and prosper. maintaining in-use vehicle performance, but also pro- moting new vehicle sales; if sound after-sales services The counterfeit spare parts phenomenon has sup- are provided, buyers are potentially more inclined ply, demand, and market function dimensions to it. to purchase new vehicles. As the automotive market On the supply side, counterfeit networks are exten- matures, the potential of vehicle-part counterfeiters sive, emanating out of parts of Asia, Russia, and to tap into various business opportunities and chal- Latin America. On the demand side, vehicle owners lenges of counterfeit vehicle parts prevailing in the in developing countries tend to be extremely price market have gradually emerged. sensitive when choosing spare parts. For example, a survey in Myanmar, an emerging market with a large From the demand side, in many parts of the develop- used-vehicle stock, found that the quality of the prod- ing world, such as Africa and parts of Asia, the major- uct and service for vehicle owners seeking repairs ity of the domestic vehicle fleet is secondhand and usually ranks second and third, respectively, among comparatively old even when they were imported, consumers’ concerns after price. Most Burmese car so they degrade faster, increasing the demand for owners have little knowledge of brands and prod- and frequency of repairs and maintenance. From the ucts, and usually request the product with reference supply side, automotive business in the world is pay- to the price, not the brand. It was also observed that ing more and more attention to aftermarket services consumers will choose spare parts depending on which are considered to be important for enhanc- their car type, used or new, when there is a high price ing customer satisfaction and brand loyalty. In some difference between branded and counterfeit spare markets, such as China, the spare parts business is parts. This relationship was found to vary, however, projected to be a core part of revenue source growth where foreknowledge of the period of usage was for OEMs (Deloitte China 2013). known and judged to be long: the longer the spare part is expected to be used, the more likely the con- Unfortunately, the lucrativeness of the motor vehicle sumer will request and invest in a branded product. parts supply business is such that it has attracted the Mediating these supply and demand pressures are attention of counterfeiters, who supply fraudulent the mechanisms of the “gray” market. Some genu- parts that are often designed to look like the real ine auto parts are diverted from formal distribution thing. Because counterfeit spare parts may com- channels and can be sold in circuits unauthorized by promise on quality of input materials or production local legislation or not controlled by the brand owner. standards, they may play a role in traffic crashes (Peresson 2019) and they can also lead to failure of Programs to address parts counterfeiting will involve tailpipe emissions control, not to mention vehicle cooperation between government and industry degradation. For these reasons, it is important for and should focus on both corporate and securi- countries adopting an MM posture to design and ty-based measures, according to industry experts. 77 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY On the corporate side, four factors are key to effec- Even in industrialized countries with substantial tive reduction of counterfeiting: product differentia- motor vehicle manufacturing and formal indus- tion, which limits ease in counterfeiting; stakeholder tries, there are numerous points in a vehicle’s life at engagement to ensure that participants along the which body construction or modification oversight supply chain can identify genuine from counterfeit is important. HDVs are often manufactured by more parts; consumer (end user) involvement, to educate than one company. Chassis manufacturers may build end users on the benefits and true life cycle costs of a structure that includes the engine, powertrain, sus- quality parts use; and promotion of changes through pension, brakes, steering system, and some related brand identification. On the security side, products systems. For goods vehicles, chassis manufacturers should adapt techniques of serialization/traceability, may also build the cabin housing the operator, while anti-counterfeiting authentication technologies, and bus chassis manufacture usually does not include any tamper evidence. In many developing countries, the body element. (See examples of typical truck chassis use of these techniques generally requires strong in Image 4.2, and bus chassis in image Image 4.4.) A public efforts to make them well known. different manufacturer would be responsible for con- structing the body, which, in the case of buses and Oversight and quality assurance of vehicle coaches, means ensuring the safety of the passenger body construction and modification compartment. Chassis manufacturers then would have primary responsibility over some performance A key issue for vehicle safety standards is adherence standards, like emissions, braking, and steering. The to regulatory standards pertaining to vehicle body body manufacturer has responsibility over elements structure and modifications. Structural changes and such as seat anchorages, safety belts, roll-over resis- modifications can compromise the technical perfor- tance in buses, lights, and noise, and also generally mance of the vehicle in terms of both crashworthiness has final responsibility for a vehicle’s overall compli- and roadworthiness performance. Compliance with ance with standards. However, the distribution of vehicle body standards and modifications apply to all responsibilities can vary, so should be understood categories of vehicles but are particularly important case by case. Broadly, however, the regulatory sys- for high-occupancy vehicles (transit vehicles, such as tem needs to function to ensure that chassis manu- minibuses) and heavy goods vehicles, where potential facturers provide all the necessary specifications to for modifications to adversely affect on-road stability the downstream body manufacturer, and the down- is greater and potential damage caused in the event stream manufacturer conforms both to the require- of crashes is greater than with LDVs. ments of the specification and to broader health, safety, and environmental regulations. 78 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Image 4.2. Example of Single-Unit Truck Cab and Chassis (Fiat Ducato from AL-KO) Source: mahertruckcenter.com Image 4.3. Example of Single-Unit Truck Cab and Chassis (Chevrolet 3500 Crew Cab) Source: mahertruckcenter.com 79 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Image 4.4. Example of Bus Chassis (Mercedes-Benz OF1721) Source: https://www.mercedes-benz-bus.com/es_AR/models/of1721.html In addition to assuring quality at the point of body regulatory oversight. A 2013 study of vehicle alter- construction over imported chassis for HDVs, vehicle ations carried out at the Suame Magazine industrial body construction oversight systems also need to be cluster in Kumasi, Ghana, categorized the types of able to monitor other processes of vehicle modifi- vehicle alterations that were observed to be regu- cation that may impact HDVs and LDVs during their larly performed as part of the tropicalization process lifetimes. Examples of such lifetime modifications (Amedorme and Agbezudor 2013) and identified the might include retrofit for an alternative fuel source following processes: (such as adding a CNG or LPG fuel delivery system), • Suspension system (leaf spring) alteration (to installation of wheelchair ramps or other facilities accommodate vehicles to irregular road surfaces) for disabled drivers or passengers, modification to change the way a vehicle is used, alteration of trucks • Chassis extension or wheelbase alteration for special purposes, or other changes that may be • Conversion of gasoline injection to carburetor for leisure or hobby purposes. system • Propeller shaft extension In developing country contexts, many other vehicle modifications are often undertaken in order to adapt • Increase in vehicle capacity so as to carry more vehicles originally built for developed country mar- passengers or goods, including alteration of seat- kets to the conditions of developing countries (a pro- ing configuration cess often referred to as “tropicalization”), in addition • Radiator change and thermostat removal to the various reasons that vehicles may be modified as discussed above. In many low- and middle-in- • Complete conversion of one vehicle type to come countries, these modifications are frequently another carried out by informal sector firms, with little to no 80 MOBILITY AND TRANSPORT CONNECTIVITY SERIES • Conversion of passenger van to commercial length cannot be found, weakening of the braking vehicle system (both because of inappropriate cable lengths and use of break hoses incompatible with the pres- • Building or mounting of bodies on naked chassis sure required), weaknesses in load support system • Conversion of automatic transmission to manual because of incompatibility of individual leaves in the transmission leaf spring assembly and poor welding/joining prac- • Changing of motorcycle to tricycle tice, increased chance of vehicle overturning because of elevated center of gravity, increased chance of • Changing of right-hand drive to left-hand drive accidents because turning radii are expanded beyond vehicle safe practice for local road design, and increased • Conversion of transistorized ignition system to the weight. In short, these modifications often alter coil ignition system the carefully engineered relationship among Gross Vehicle Weight Rating, engine size and power, brak- • Conversion of one-door car to multiple-door car ing, and load support, with little understanding of the • Various structural cosmetic changes, such as mod- road safety effects of these changes.8 ifying of body styles, fixing of glasses, painting or spraying works, colored head lamp, and tinted Responsibility for ensuring that vehicles comply with glass the body structure and modification standards ulti- • Conversion of gasoline engine vehicle to gas (LPG) mately rests on the vehicle owner or fleet owners in engine vehicle or vice versa. the case of passenger vehicles. However, because of industry fragmentation, it is important to have a Another study has documented the modification of designated agency responsible for accrediting auto trucks in West Africa by doubling or trebling their body builders in the countries. This agency would fuel tank capacity to facilitate illegal cross-border also be responsible for authorizing approvals for smuggling of fuels from Nigeria to nearby countries vehicle designs for specific vehicle types and ensur- (Aliyou, Houssou, and Attisso 2013). ing that designs comply with national standards as well as manufacturer-specific technical criteria. It is An earlier Ghanaian study of HDV modifications critical for this authorizing agency to work closely in particular catalogued the potential unintended with the lead agency on road safety to ensure that consequences of these kinds of modifications high-risk modifications are appropriately scrutinized (Adedamola 2009). These include safety hazards from prior to providing clearance. Typically, such standards reduced strength of vehicle structure,7 overloading of have provisions for making exceptions if the vehicle is engines because of additional weight (in turn increas- intended for disabled drivers and requires additional ing fuel consumption/CO2 emissions, and premature modification. Similarly, special-use vehicles, such as wear of vehicle body due to vibration), disabling of school buses and ambulances, may have additional rear lighting system because cables of appropriate criteria for consideration. 7 The materials used at Suame Magazine were frequently found to be defective, having cracks, deformations, and corrosion. Thus, they “can no longer withstand the loads on them when the vehicle is in operation.” Structural weakness from defective materials are exacerbated by weak joining practices. 8 To be sure, another set of “tropicalization” measures frequently identified does not involve vehicle body modification per se, but rather complete or partial dismantling of emissions control and vehicle safety systems when the vehicle is imported from North America, the EU, or Japan into low- and middle-income countries. This can include removal of diesel particulate filters or catalytic converters (which often have high resale value in certain markets), disabling through electronic or mechanical means exhaust gas recirculation, electronic spoofing of NOx sensors for selective catalytic reduction (or the system’s removal entirely), removal of airbags, or, as Amedorme and Agbezudor (2013) observed, replacement of fuel injection with carburetion systems. Effective first-use certification, in-use PTI, and on-road enforcement programs can help get such alterations under control. 81 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Establishment and implementation of a standardized of existing passenger vehicles at the time of approach to vehicle body construction and mod- operation as well as during use. The role of visible ification quality assurance would involve four key enforcement in penalizing the offending parties elements: must be appreciated to ensure a high level of compliance. • Assignment of primary responsibility for overseeing vehicle body assembly, modification, and accredi- • Public awareness on safety of passenger vehicles. tation. It is critical for an authority to be assigned While the structural modifications are mostly responsibility to oversee the industry, either driven by demand for increased capacity and through the establishment of standards and travel needs, the regulatory framework in supply- accreditation itself, or negotiating with industry ing the safety features must be advocated along- to ensure that it is developing such standards and side demand concerns. accreditation responsibilities. End-of-Life Vehicle management • In-depth crash investigation of high-occupancy vehicles. Given that the crash dynamics and appli- As discussed in chapter 3, as one of the core con- cable vehicle safety standards are quite different cepts of MM, developing countries should consider for passenger vehicles, it will be important for the developing a formal End-of-Life Vehicles (ELVs) man- road safety agency to undertake in-depth crash agement program for five key reasons, namely the investigation for every high-casualty crash. The volume of obsolete vehicles, the economic and job focus of the investigation should be identifying creation potential of ELV programs, the need to close vehicle-related factors that not only contributed a blind spot in worldwide efforts to create a circular to the crash but to the overall injury outcome (for economy, the need to manage scarce landfill space, example, integrity of the overall body cage, inte- and the need to improve management of hazardous rior components responsible for blunt impact inju- wastes. ries, or any other factor that may have increased the severity of the crash). Having an overall In regions of the developed world where annual assessment of risk factors associated with passen- registration of vehicles is required (the EU, Japan, ger vehicles will help in guiding the standards and Australia, the United States, and Canada), data show approval process for design modifications. that between 3 percent and 9 percent of vehicles fall out of use on an annual basis. Though the data are • Engagement with the auto body builders. The key imprecise, it seems that, on average, about 60 per- for compliance with body design standards would cent of these vehicles are discarded domestically as lie in having consensus among the stakeholders ELVs, while the remaining 40 percent are exported as that this would be uniformly enforced and eco- secondhand vehicles to markets primarily in devel- nomically viable. As fleet modifications come at oping countries. Eventually, even those exported a cost to the operators, there should be financial vehicles will become ELVs in the countries they are disincentives toward investing in the modification exported to. 82 MOBILITY AND TRANSPORT CONNECTIVITY SERIES In recipient countries in the developing world, on the fuels, and batteries—and then high-value items with other hand, virtually 100 percent of the vehicles pres- after-market value, such as engines, tires, and rims, ent in the country will one day be ELVs. The MM pilot are separated and gathered for resale. The remains project in Ethiopia and Kenya, for example, estimated of the vehicles are then shredded in industrial shred- that by 2030, more than 20,000 cars and 25,000 ders. A series of post-shredder treatments (PSTs) are motorcycles in Ethiopia, and more than 160,000 then applied to Automobile Shredding Residue (ASR): cars and almost 220,000 motorcycles in Kenya, will heavy and light materials are sorted through an air be scrapped each year; that number is expected to classifier, with the light ASR portion set aside usually increase exponentially. Developing mechanisms for for landfill. The remaining ASR material is passed sustainable management of those scrapped vehicles through a magnetic drum to separate out ferrous in developing countries, therefore, is critically import- metals, then a non-ferrous metal separator, and ant for long-term green growth. the remaining, heavy ASR is then also usually put to landfill. Over time, the objective of these mandated Worldwide, management of ELVs has been driven ELV management systems is to ultimately increase by two primary concerns, both of which are relevant the proportion of the vehicle, by weight, that avoids for developing countries: the need to manage haz- going to landfill, either by being recycled or being ardous substances and the need to reduce landfill used in thermal conversion processes. space, especially for countries such as Japan and the Republic of Korea, which have space constraints. In In many developing country contexts, ELV popula- addition, for developing countries, ELV management tions may be currently too low, and the cost of indus- can provide potential labor creation and/or labor trial shredders too high, to make a compelling case formalization opportunities, particularly for newly for establishment of mechanized ELV management urbanized, low-income workers. processes at the current time. However, with motor- ization rates increasing and potential successful When mandated by legislation or regulation, the ELV application of other aspects of an MM program, a management chain in developed countries is typi- plan to evolve a mature ELV management program cally structured around two phases: dismantling and should be considered, as early as possible, even when shredding. ELVs are essentially dismantled manu- vehicle penetration rates are quite low, as the lesson ally through extraction of hazardous wastes—fluids, from the Republic of Korea shows (see Box 4.3.). Box 4.3. The Republic of Korea’s End-of-Life Vehicles Management The Republic of Korea has had particularly progressive policies with respect to End-of-Life Vehicles (ELVs) for several decades. The Korean Automobile Dismantlement and Recycling Association (KADRA) was created in 1989 through legislation, as a partnership among car-scrapping businesses and a nonprofit corporation for recycling car parts, the Korean Automobile Recycling Cooperative (KARCO). This was a particularly forward-looking policy, since the Republic of Korea's rate of motorization at the time was only about 81 cars per 1,000 persons (World Bank calculations based on Senbil, Zhang, and Fujiwara 2007). 83 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY KADRA's role was to function as a think tank and advocacy organization in the following areas: • Suggest improvements to automobile regulations and policies: o Improve legislation, including vehicle administration law, resource recycling law, waste manage- ment law, air environment preservation law o Propose policies of automobile disassembling and recycling • Carry forward the environment-friendly and automobile resource recycling projects: o Strengthen the functions of recycling project for automobile resource cycle o Convert to green business environment • Enhance the car scrap and cancellation system: o Provide information interface with the Ministry of Land, Transport and Maritime Affairs and Ministry of Environment o Carry out information data processing projects and system development o Vitalize automobile used parts market o Operate the nationally integrated management system for automobile used parts efficiency o Establish Integrated Distribution Network and liaison with related organizations • Function as an association for the car scrappage industry: o Foster good practices and prevent illegal activities o Work to eradicate unregistered disassembling-recycling contractors In 2008, the Republic of Korea enacted the Resource Recycling of Electrical and Electronic Equipment and Vehicles Act. This act established an Eco-Assurance System, which, among other things, over- sees environmentally sound management of waste, including achievement of a mandated recycling rate, compliance with methods for recycling, obligation for collection by distributor, registration of ELV recycling businesses, and professionalized management of processes. The recycling rate was mandated at 95 percent by 2015. Responsibility for compliance with both guidance and ensuring the attainment of recycling rates was placed with all involved in the chain, including dismantlers, shred- ders, ASR recyclers, and refrigerant gas processors. In keeping with prior Korean and increased inter- national focus on Extended Producer Responsibility (EPR), to ensure adequate measures for waste prevention at design, automobile manufacturers and importers also have responsibility for compli- ance; if ELV recycling costs exceed the prices that can be recouped through market mechanisms, the manufacturer/importer bears the additional cost. Over time, these costs would be capitalized into the price of the vehicles. In addition, manufacturers and importers then have a stake in trying to develop and support downstream markets. 84 MOBILITY AND TRANSPORT CONNECTIVITY SERIES In general, developing an ELV management program stakeholder engagement. Initiatives to improve MM might involve the following steps: should consider having a designated function special- ized and focused on stakeholder and public engage- • Establish an association of car scrappers and work ment, outreach, and communication. to professionalize the industry. In many develop- ing country contexts, vehicle scrappage is almost Change management and public engagement is par- exclusively the province of the informal sector. ticularly crucial in today’s social media environment of atomized sources of information for the general • Develop standard policies for management of haz- public. The rule of thumb is that, in the absence of ardous materials from ELVs, especially for batter- consistent information about the why and how of ies, chlorofluorocarbons (CFCs)/hydrochlorofluoro- changes taking place (changes that affect a large carbons (HCFCs), and automotive fluids. portion of the population), that void will be filled with home-grown explanations, with people imagining • Standardize approaches to vehicle dismantle- nefarious motives that can quickly become accepted ment and look for ways to extend dismantlement as fact. The best defense against rumor and con- beyond current practice, particularly looking to spiracy theory as the source of people’s information develop markets that do not currently exist. about an MM program is having a robust program of public engagement in the context of change • Begin to invest in mechanized vehicle shredding management. and post-shredding equipment initially in major metropolitan areas with populations greater than Public engagement in policy development can be 1 million people. Such investment should seek done through several methods. Some that are com- to safeguard and enhance labor-intensive vehi- monly used in transport policy include the establish- cle dismantlement as the primary focus of ELV ment of advisory boards, comprised of represen- treatment. (that is, shredding should not supplant tatives of the public at large or of special interest other parts of the ELV process). groups, which are typically selected by project man- agers and government authorities; focus groups and Change management and public engagement workshops, which are a means of public consultation with the objective of gathering information on issues MM policies and programs impact numerous seg- of concern and receiving feedback to ensure the pol- ments of the population, including public agencies icy or program addresses needs or is politically fea- at national and subnational levels; the private sec- sible; and planning charrettes, which involve stake- tor, which includes vehicle manufacturers and ser- holders in the definition of elements of the policy and vice providers; transport users; and citizens that are program (Quick and Zhao 2011) and, perhaps most exposed to transport externalities, such as air pollu- critical of all, social media engagement strategies. tion, car crashes, or the more indirect effects on the cost of products and services. It is, therefore, import- Public engagement can serve multiple purposes, ant to identify the relevant stakeholders, understand including the provision of information, improving their role in the design and implementation of MM understanding of the problem to address or bar- policies and programs, and define a strategy for riers to implementation, generating new ideas for 85 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY solutions, and building consensus around solutions. practices of the local culture. This will help build trust The public engagement strategy and the select in the process and legitimize the resulting policy and engagement methods should be appropriate to programs. achieve the objectives of engagement and reflect the Strengthen Market Mechanisms for Funding and Managing Vehicle Stock Growth and Turnover MM cannot be conceived of solely as an initiative of man-and-his-truck structure that tends to domi- government, or a question of governance of motor nate freight and passenger transport operations. vehicle stocks. There also needs to be proactive Commercial vehicle operations are often carried out attention paid to the incentives and financing envi- by small-scale operators who lack the capacity to ronment in which motor vehicle purchases—both accumulate capital to facilitate investments in new fleets and individual vehicles—occur. Experience in vehicle stock (Behrens, McCormick, and Mfinanga high-income countries suggests that access to credit 2016). On the own-account/household transport and varied (and competing) models of vehicle own- side, low purchasing power is driven not only by low ership and availability are key. In a sense, these are household incomes generally, but also by the low the “lubricants” of the motor vehicle markets that can quality of service and personal security concerns facilitate—or gum up—changes toward cleaner, more associated with public transport services, which drive fuel-efficient, and safer vehicle stocks. Depending on households’ desire to own a vehicle at income levels where a country is along its motorization curve (see where their household resources would arguably be Figure 2.1), it may need to emphasize vehicle stock better spent on other uses. turnover more than growth to meet its development objectives. Lack of availability of credit. Low purchasing power tends to lead to constrained availability of credit for In the case of low- and middle-income countries, vehicle purchases generally. For vehicles intended for three fundamental and tightly interwoven conditions private use, in most low- and middle-income coun- create challenges for vehicle stock greening and turn- tries, comparatively few households usually have over: low purchasing power of many potential buy- the ability to access credit on the formal market for ers, constrained availability of formal credit, and lack the purpose of acquisition of a vehicle. For vehicles of diversity of vehicle availability models. intended for commercial use, as already noted, much of the commerce occurs on a cash basis, often with Low purchasing power. Low purchasing power (that no long-term buildup of capital reserves. This has is, lack of creditworthiness) is a fact of life for many historically meant that it is difficult to facilitate credit vehicle owners and operators in low- and middle-in- because credit markets assign substantial risk to this come countries. On the commercial side, it tends to hyper-cash ecosystem. In many low- and middle-in- be driven by the pervasiveness of a man-and-his-bus/ come countries, household use of LDVs often blurs 86 MOBILITY AND TRANSPORT CONNECTIVITY SERIES the line between purely private and purely commer- of the solution), but rather fostering the creation cial operation. Household vehicles are often acquired of third-party ownership models, whereby capital with the intent of supplementing household income investment does not need to be made by the opera- with informal commercial service provision. tor. Examples of such aggregation vary by subsector and might involve development of vehicle leasing Lack of diversity of vehicle availability models. “Vehicle companies for taxicab operation, bus vehicle holding availability” refers to the mechanism by which house- and maintenance companies integrated into public holds and firms get access to the vehicles they oper- transport operations, or even conventional car-shar- ate for either commercial or own-account purposes. ing operations. The viability of the specific scheme In many low- and middle-income countries, the only will depend on the subsector and country context. option for getting access to a vehicle is to purchase That said, in low- and middle-income country mar- one outright (often requiring purchasers to scrape kets where cartelization is already a big challenge together money to buy one outright with cash, uti- (for example, Teravaninthorn and Raballand 2009), lizing informal finance networks, such as loans from encouraging third-party ownership models in a way family, friends, and acquaintances, because of the that does not create new or exacerbate existing aforementioned unavailability of formal credit oppor- monopolistic practices encouraging rent-seeking tunities). This creates a lumpy cash-flow environment behavior is an inherent challenge. in which capex concerns dominate opex/Total Cost of Ownership (TCO) and establishes a perverse incen- Eliminate capex burden of individual operators. tive toward preferring the vehicle with the cheap- Encouraging the establishment of third-party vehicle est initial purchase price. If credit were more widely ownership models can be accompanied by efforts available, then leasing options would be as well, to encourage operator participation to reduce their which could elevate the role of TCO in vehicle acquisi- capex burden. De facto, many informal commer- tion decisions. cial operations already do this, where vehicles are owned by well-connected investors who rent vehicles These challenges are daunting and long-standing, on a daily or weekly basis to entrepreneur opera- and do not have simple solutions. Recent work in tors to eke out a living. But maintenance and capital both the World Bank and elsewhere, focused on spe- accrual is often left out of this informal arrangement. cific subsectors (like bus electrification or taxi fleet Formalizing these arrangements can increase oppor- renewal), share some overarching principles that war- tunities for credit, allow for more systematic accrual rant highlighting here. Whether these principles are of capital to compensate for depreciation, improved universalizable for all transport subsectors, and how maintenance practices (including, arguably, better to operationalize them in complex low- and middle-in- compliance with PTI requirements), and better regu- come country environments, remain critical ques- lation of the vehicle availability arrangement. tions. These principles can be summarized as follows: Isolate payment risks from demand risks. Aggregating Where possible, aggregate demand for vehicles from demand for vehicles and using that process to try to individuals to fleets. Such aggregation of demand eliminate capex burden from individual operators will does not necessarily mean consolidating traditional not in and of itself alter fundamental challenges to operators per se (though this could also be part funding of improvement in vehicle stocks resulting 87 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY from low purchasing power. But these measures can show two such examples in Figure 4.7 and Figure 4.8. help isolate specific risks that could then be better Again, the examples shown are not meant to mini- assigned and targeted for risk mitigation among mize the challenges posed by low purchasing power private and public actors. For example, the recently of ultimate end users or suggest that this kind of proposed structure for development of regional solution is workable in every context, but rather they financing facilities to address decarbonization in the are meant to demonstrate conceptual applications transport sector de facto function on this principle— of risk allocation that might play a role in helping to that of separating payment from demand risks. We facilitate finance for fleet expansion or turnover. Figure 4.7. Stylized Structure of Funds Flows for Scale-Up Investments to Facilitate Transition to E-Buses Financing Facility manager Capitalize and manage facility Regional financing facility Debt Debt/equity Direct financing Original – debt / equity / equipment guarantee manufacturers (OEM) Regional e-bus leasing Payment Commercial company E-bus sale / Debt/ debt lease equity risk Lease of e- buses Long-term concession IFIs (e.g., IFC) City e-bus operator Government Transit services Demand risk Source: Benitez and Bisbey 2021. 88 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Figure 4.8. Stylized Structure of Funds Flows to Facilitate Replacement of Poor-Quality with Better-Quality Vehicles in Light-Duty Commercial Fleets World Bank financing Facility Manager On-lending and manage facility Na9onal TDFF (risk-sharing facility) First-loss instrument Importers Retail financial ins9tu9ons BeMer (RFIs) secondhand hand Payment Debt vehicles risk Borrower(s) IFIs Aggregators (e.g., IFC) Demand MSMEs Lessors risk Individuals Source: Benitez and Bisbey 2021. Explicit separation and allocation of payment and the creation of stable, long-term, verifiable flows that demand risks creates opportunities for provision of can be assigned risk and securitized. While the cases explicit and enumerated subsidies at specific points considered typically consider “new” or untested tech- in the overall process (delineated by blue arrows). nologies, such as e-mobility or hydrogen infrastruc- ture, the model could be adapted to any kind of incen- Create stable, long-term, verifiable flows that can be tive focus which a DPOS might envision, including, for securitized. An outcome of the above strategies can be example, used ICE vehicles of a certain size limitation that the resulting structure of flow of funds can help or certified fuel economy standard. facilitate interest from long-term investors through 89 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY References ADB (Asian Development Bank). 2003. Vehicle Emissions Standards and Inspection and Maintenance: Policy Guidelines for Reducing Vehicle Emissions in Asia. 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Toward a Strategy to Operationalize Motorization Management in Low- and Middle-Income Countries 93 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY This report has laid out a framework for addressing We identify four key ways that the international com- comprehensively the management of national motor munity, broadly, can assist low- and middle-income vehicle stocks in low- and middle-income countries, to countries in establishing Motorization Management improve prospects to decarbonize the road transport (MM) programs: strengthening the international sector, improve the performance of the vehicle pillar framework for the trade of secondhand vehicles; within a safe systems approach to road safety, and taking early action to support diagnostics of vehicle reduce mobile source contributions to air pollution. stock dynamics in low- and middle-income countries As has also been highlighted throughout this report, and policy adoption vis-à-vis improving vehicle out- the kinds of measures discussed here are potentially comes; supporting investments in MM systems in disruptive—to formal and informal labor markets, to low- and middle-income countries; and supporting national fiscal systems, and to entrenched interests the development of permanent, regional observato- in the automotive sector. Successful implementation, ries to undertake continuous fleet analysis. These are therefore, will depend on international collaboration discussed in turn. and support. This chapter discusses key actions that the international community can undertake in concert with low- and middle-income countries to increase the chances that such a program will be successful. International Framework for Trade of Secondhand Vehicles There is a critical need to strengthen the international inspection of vehicles, 54 percent of the inspected framework for trade of used/secondhand vehicles. vehicles would fail a roadworthiness test if subjected Five key areas in particular need to be strengthened. to a standard periodic technical inspection (PTI) (Netherlands ILT 2020). As ELVs, their export should Establishing rules for acceptable practice in the export of be governed under the Basel Convention on the used vehicles. The key principle around which consen- Control of Transboundary Movements of Hazardous sus seems to be emerging is that vehicles that cannot Wastes and their Disposals.1 Ensuring that all vehicles be demonstrated to be roadworthy in the country of being exported do have a valid roadworthiness certif- export should not be allowed to be exported to any icate or inspection certificate from PTI or something other country, particularly low- and middle-income equivalent at the time of export would thus help to countries. At present, some unknown proportion of distinguish roadworthy motor vehicles from hazard- vehicles exported from North America, the European ous waste subject to Basel Convention controls. It Union (EU), and Japan should really be classified would also help to balance the cost burden of over- as End-of-Life Vehicles (ELVs). A study by the Dutch sight of internationally traded used vehicles between government of vehicles queuing for export to Africa the recipient and the exporting country. at the Port of Rotterdam found that, in a random 1 Substances prevalent in ELVs subject to control of the Basel Convention include lead-acid batteries (drained or undrained), battery fluid, lithium batteries, tires, mercury switches, oils, fuels, antifreeze, brake pads containing asbestos, non-deployed airbags, electrical/electronic assemblies, among others. In the absence of roadworthiness certificates, these would be considered waste products. 94 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Establishing data architecture and protocols to facilitate information about the kinds of vehicles traded. Prior exchange of vehicle history information among coun- to this, the most complete picture of international tries. The motor vehicle information management flows of secondhand vehicles was data from 2009 systems (MVIMSes) of governments that are the main (Fuse, Kosaka, and Kashima 2009), which was esti- source of vehicle imports in low- and middle-income mated by triangulating different trade data sources countries—the United States, EU, Japan, etc.—contain with an estimate of missing ELVs. One of the rea- substantial amounts of information about individual sons for the dearth of information about trade flows vehicle histories, but this historical data usually does of secondhand vehicles is related to coverage and not accompany the vehicle when it is exported to detail of the available databases. Fuse, Kosaka, and developing countries. This data blindness harms both Kashima (2009), for example, noted that the United buyers and regulators in the recipient countries—for Nations’ (UN’s) harmonized six-digit classification example, if there is accident or recall history about system in the trade database does not distinguish which they should be made aware—but it also harms between new and used vehicles. There were private interests in the exporting country. For example, databases available at the time the article was writ- notwithstanding the EU requirement for certified ten that provided sufficient trade detail to distinguish destruction of ELVs (2000/53/EC), Directorate-General between new and used vehicles, but these covered for Environment estimates that about 35 percent of only subsets of countries, so substantial interpola- ELVs across the EU go missing each year. Establishing tion was necessary. Strengthening UN trade data to appropriate data protocols as part of the process of make trade in secondhand vehicles observable in used vehicle export and import would help to mini- non-proprietary trade data, therefore, is an important mize what appears to be missing ELVs. objective for any international framework for trade in secondhand vehicles. Strengthening trade accounting frameworks to enable tracking of trade in secondhand goods, including vehi- Strengthening regional frameworks for harmonizing cles and vehicle parts. In its October 2020 publica- standards and actions. Many, if not most, low- and tion, the United Nations Environment Programme middle-income countries do not have vehicle mar- (UNEP) published the results of its efforts to develop kets of sufficient size to substantially influence inter- a picture of used vehicle data flows, reconstructed national flows of vehicles. For this reason, taking from painstaking and detailed examination of export actions such as adoption of harmonized vehicle and and import data of individual countries (UNEP 2020). fuel standards as regional trading blocs makes sense. This effort only produced overall flow numbers for (See Box 5.1. for a recent example.) The international light-duty vehicles (LDVs); heavy duty vehicles (HDVs) community in general, and the UN system in particu- were not included in this first round, nor was detailed lar, should support actions taken at the regional level. 95 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Box 5.1. ECOWAS Regional Trade Bloc Introduces Harmonized Import Vehicle and Fuel Standards In February 2020, 15 West African countries cooperating in the Economic Commission of West African States (ECOWAS) adopted harmonized fuels and vehicle standards. This decision will have major impacts on the import of used vehicles in West Africa, as currently most used vehicles being imported do not meet these standards. This is the first harmonized used vehicles policy at a regional level in Africa and includes: • As of January 1, 2021, all used light-duty vehicles must meet Euro 4 vehicle emission standards. • Each country will set an age standard with a maximum of five years old for light-duty vehicles and 10 years old for heavy-duty vehicles, to be implemented within 10 years. Similar initiatives are being considered in East and Southern Africa. Sources: UNEP 2020; Netherlands ILT 2020. For more information: https://www.unep.org/news-and-stories/story/west-african-ministers-adopt-cleaner-fuels-and-vehicles-standards. Strengthening protocols for materials recovery in a federal government currently has no requirement for globalized circular economy. As noted in chapter 4, materials recovery from vehicles. Assessments of the many governments of automobile producing coun- success of these programs have shown substantial tries have developed laws or mandates requiring that gaps in compliance, including the abovementioned vehicle producers recover materials from the vehi- finding that many vehicles that should be identified cles they produce when they become ELVs, in order as ELV are simply missing (Fergusson 2007). A key to minimize the mass of material going into landfills. need in the establishment of an international frame- These governments include the EU (2000/53/EC), work for trade in secondhand vehicles, therefore, is to Japan (ELV recycling law of 2002), and the Republic clarify the protocols and responsibilities that govern of Korea (Resource Recycling Act of 2006). Some materials recovery to enhance the circular economy. US states have enacted similar laws, though the US 96 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Diagnostic Studies to Facilitate Adoption of Motorization Management Approaches A critically important early action for MM is a diagnos- and end-of-life practices in the country. The diag- tic study, for individual countries, or, preferably, for nostic study would then tailor recommendations to groups of countries which might create harmonized the specifics of the country or groups of countries standards for vehicles and fuels as a bloc. The diag- in question. Multilateral development banks (MDBs) nostic should use the best available data to under- and other assistance agencies should seek to support stand the nature of the existing motor vehicle stock such studies as part of sectoral diagnostics or project (both in terms of composition and vehicle use), recent pipeline work and use the results to inform country trends in how the vehicle stock has been growing, engagement in the sector. inventory policies and other factors that influence that growth, and forecast—as best as existing data Diagnostic studies would identify an appropriate will allow—how the stock is expected to grow under sequence of actions to be undertaken in a specific a business-as-usual scenario. The diagnostic should context, including establishing a policy development also systematically assess the existing institutional process. This policy development process can be sup- framework and capacity for managing the various ported by the international development community aspects of motorization discussed in this report, as and might lead to specific measures, such as those well as the structure of different parts of the automo- outlined in Box 3.1. tive industry, from vehicle acquisition to aftermarket Support Low- and Middle-Income Countries’ Establishment and Strengthening of Motorization Management Policies and Institutions through Official Development Assistance Resources and Technical Assistance Diagnostic studies would identify an appropriate Investments to strengthen government oversight sequence of actions to be undertaken in a specific context, and they would also likely identify specific Programmatic investments are capital expenditures investment needs. Indeed, official development assis- needed to effectively create or strengthen the vari- tance (ODA) to support low- and middle-income coun- ous programs introduced in chapter 4. These might tries in establishing MM programs could take the include the following: form of both policy-based and investment lending. Investment lending, in turn, could support two differ- MVIMS. This investment would include not only ent kinds of investments: investments to strengthen hardware for servers and software for database government oversight and investments to influence management and interface, but also all the hardware market outcomes. These will be discussed in turn. and software to ensure real-time connectivity from 97 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY all the geographically dispersed locations in a PTI. Capital investment required for PTI systems con- country that may need to access the system, both sists of physical infrastructure for carrying out inspec- wired and wireless. Depending on the ambition and tions, including land, structures for inspection arena, starting point, the investment required for this most office buildings, infrastructure for staging areas, basic of enabling measures might be no more than inspection equipment, etc. We estimate that to estab- US$100 million. lish a basic program of PTI from scratch to inspect roughly 35,000 LDVs, 20,000 two-wheelers, and First-use certification system. This investment would 12,000 HDVs per year would require an initial invest- include facilities and equipment to carry out both ment of about US$3 million to US$5 million for equip- back-office functions and frontline inspections of ment, not including costs associated with land acqui- vehicles entering a country. Some or most of this sition and the construction of the facilities on the investment might come from the private sector under roughly 12,000 square meters of space needed. This a public-private partnership (PPP) arrangement, but investment could be provided by the public sectors in the land to accommodate the facilities would most a conventional public service contract arrangement, likely need to be provided by the government, as part or by the private sector, in a PPP arrangement. In the of physical planning for customs warehousing associ- case of the former, the public sector would assume ated with the port or dry port. The size of the facilities demand risk, while in the latter, the private sector required would depend on the anticipated number of would assume some or all of the risk. This demand vehicles imported monthly, the extent to which two- risk could be mitigated through various risk mitiga- stage certification is used (see discussion under the tion instruments, including the use of guarantees. “Certification/homologation systems” section in chap- ter 4), and whether exporting countries adopt export On-road enforcement programs. Substantial capital standards (see discussion under the “International investment is not needed for on-road enforcement Framework for Trade of Secondhand Vehicles” sec- programs, but use of instrumentation in on-road tion in chapter 5). New Zealand is considered the enforcement would require acquisition of equipment, gold standard for first-use certification systems for potentially including service or operations contracts new and used vehicle imports. Based on estimated with the manufacturer or a third party, where local equipment costs mandated under New Zealand’s expertise is not available. Existing programs suggest regulations for first-use certification, and assum- a cost of about US$1 to US$2 per year per vehicle ing importation of 100,000 two-wheelers per year, to administer a program of roadside enforcement, 100,000 LDVs per year, and 10,000 HDVs per year, we remote sensing data collection, compliance and anal- calculate an initial investment need of about US$18 ysis, reporting, and administration. million for equipment, not including costs associated with land acquisition and construction of building Development of human capital and sustainability in the facilities on the roughly 20,000 square meters of automotive value chain. Depending on the scope of space needed. This volume of imports would gener- ambition for a human capital development program ate roughly 450 person-years of employment. for the preventive maintenance and repair industry, 98 MOBILITY AND TRANSPORT CONNECTIVITY SERIES vehicle body construction and modification industry, A common approach to using public resources to vehicle parts distribution system, and ELV disman- influence vehicle markets is through the use of tling, training centers with access to the latest equip- Accelerated Vehicle Retirement Programs (AVRPs) ment and facilities to undertake training may need to highlight how difficult it is to design these kinds to be developed. These centers may need to provide of programs in an economically efficient manner ancillary services, such as housing and board for stu- (see Box 3.1). Notwithstanding that challenge, how- dents participating in programs. This type of invest- ever, the sheer volume of potentially obsolete or ment could be mobilized from the private sector in stranded rolling stock assets against the magnitude an appropriate PPP and/or licensing arrangement. and urgency of the climate challenge may mean that Capital investment in facilities and vehicle shredders more aggressive use of publicly supported vehicle for an ELV program may also be envisioned. Our own buyback programs may be inevitable. estimates suggest capital investment on the order of US$10 million to US$20 million for shredding capacity The notion of “accelerated” vehicle retirement— of 100,000 vehicles per year, plus land and construc- essentially paying people to stop using highly pol- tion costs. Both land and capital could be sourced luting or fuel-inefficient motor vehicles—has been from the private sector in an appropriate PPP and/ around for a long time and has been tried with or licensing arrangement, but most likely the land greater and lesser success in various countries, both required would be linked to a regulated landfill site high-income countries and low- and middle-income (or contain a dedicated regulated landfill within it). countries. In many of the latter, however, lack of For this reason, governments would need to be access to credit is a major reason that highly polluting closely involved in the development of ELV manage- or fuel-inefficient vehicles are used in the first place. ment facilities. Consequently, a policy of accelerated vehicle retire- ment in these environments needs not only to inject In addition to capital investment for all of the above capital to incentivize fleet turnover, but also to help facilities, the programs with which they are associ- mitigate credit market failures and imperfections. In ated would also have substantial need for technical addition, whereas AVRPs in low- and middle-income support and assistance. countries in the past have targeted specific subsets or fleets of vehicles (for example, bus fleet replacement Investments to influence market outcomes during public transport reform or restructuring), to have an impact on carbon dioxide (CO2) emissions In addition to programmatic investments to establish from road transport at the magnitude required to and maintain the core motorization management achieve carbon neutrality as quickly as possible, use government programs, policies developed and imple- of AVRPs may need to be substantially scaled up. mented under an MM framework might themselves Worldwide experience with AVRPs is highly varied, be supported with public resources to try to influence with subsidy costs ranging from US$240 to US$4,500 motor vehicle markets. Such resources could take the per vehicle for LDVs, and from US$830 to US$28,000 form of fiscal incentives, direct subsidies, or credit per vehicle for HDVs. An independent assessment of enhancements to influence market decisions vis-à-vis the Beijing “Yellow Sticker” vehicle scrappage effort when and what type of vehicles consumers choose to found a benefit to cost ratio of nearly 2.5. More infor- purchase or lease. These market-influencing public mation about experience with AVRPs is summarized investments might also be supported through ODA. in appendix B of this report. 99 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Establishment of Motorization Management Observatories Supporting the development of permanent, regional The need for AVRP scale-up, combined with the tra- observatories to undertake continuous fleet analy- ditional challenges of finding efficient and effective sis is a fourth key way that international assistance formulae to make them work, highlights the compel- can help low- and middle-income countries develop ling need for MM observatories, as well as the way and maintain consistent MM approaches to policy. the MM needs to function as a system. AVRPs are Observatories have been used to help promote policy prone to unintended policy consequences, but the analysis and development in other aspects of road overarching need to cycle inefficient internal com- transport for the past two decades, including obser- bustion engine (ICE) vehicles from the motor vehicle vatories dedicated to road safety, urban transport, stock, especially in low- and middle-income countries, and transport corridors. MM observatories would, is undeniable. MM observatories are the institutional ideally, be established for groups of countries. They backbone that can enable countries and regions to could be affiliated with one or more university and be course correct when AVRPs do not function initially as funded in creative ways that utilize both public and intended, but they can play this role most effectively private sector resources. Regardless of the funding when the various components of the MM system source, though, their success will be predicated on are functioning and feeding a data ecosystem that the availability of good quality and timely data pro- paints a clear picture of how the country and region vided by the countries participating in the observa- are motorizing. Indeed, MM observatories should tory. International support can help advocate for the play this role for the range of policies and measures establishment of such observatories, define the kinds designed under an MM framework. of activities and benchmarks that such observatories would undertake and produce, and help define and harmonize protocols for anonymizing and making available to the observatories data from customs and vehicle registration country databases. 100 MOBILITY AND TRANSPORT CONNECTIVITY SERIES References Fergusson, Malcolm, End of Life Vehicles (ELV) Directive, An assessment of the current state of implementation by Member States (IP/A/ENVI/FWC/2006-172/Lot 1/C1/SC2), Policy Department, Economic and Scientific Policy, Brussels, European Parliament. https://www.europarl.europa.eu/RegData/etudes/etudes/join/2007/385625/ IPOL-ENVI_ET%282007%29385625_EN.pdf. Fuse, Masaaki, Hiroyuki Kosaka, and Shigeru Kashima. 2009. “Estimation of World Trade for Used Automobiles.” Journal of Material Cycles and Waste Management 11 (4): 348–357. doi:10.1007/s10163-009-0263-3. Netherlands ILT (Human Environment and Transport Inspectorate). 2020. “Used Vehicles Exported to Africa: A Study on the Quality of Used Export Vehicles.” Den Haag: Human Environment and Transport Inspectorate, Netherlands Ministry of Infrastructure and Water Management. https://www.ilent.nl/documenten/rapporten/2020/10/26/ rapport--used-vehicles-exported-to-africa. UNEP (United Nations Environment Programme). 2020. Used Vehicles and the Environment; A Global Overview of Used Light Duty Vehicles—Flow, Scale and Regulation. Nairobi: UNEP. https://wedocs.unep.org/ handle/20.500.11822/34175;jsessionid=AA7213C7CAEA230566CFC0D8D042FBA6. 101 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY 6. Appendices 102 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Appendix A. Comparison of World Road Statistics Motorization Data with Other Sources of Data To ensure that the World Road Statistics (WRS) data is compatible with other major data sources, the following comparisons were made in the latest years for which data were available: • Comparison with the International Organization of Motor Vehicles Manufacturers (Organisation Internationale des Constructeurs d’Automobiles; OICA) – vehicles in use • Comparison with the International Energy Agency (IEA) (World Petroleum Statistics) motor gasoline con- sumption/demand (as a proxy of kilometer vehicle traveled) Figure A.1. Comparison of OICA and IEA Data with WRS Data for Two Key Parameters The The number vehiclesof of number invehicles use in in use in Motor Motor gasoline gasoline consumption/demand consumption/demand 2015 (in 2015 (in million million units) units) in 2018 (inin million tonnes) 2018 (in million tonnes) 300 300 50 50 40 40 200 200 30 30 WRS WRS WRS WRS 20 20 Brazil Brazil 100 100 y = 0.001x - 361.12 y = 0.001x - 361.12 y 582 y = 0.7813x + = 0.7813x + 582 R² = 0.9927 R² = 0.9927 R² = 0.8849 R² = 0.8849 10 10 0 0 0 0 100 100 200 200 300 300 0 0 0 10 0 20 10 30 20 40 30 50 40 50 OICA OICA oil statistics) IEA (WorldIEA (World oil statistics) Source: International Organization of Motor Vehicle Manufacturers (OICA) (left) and International Energy Agency (IEA) (right). Both comparisons show that they are almost identical, except for the difference in motor gasoline consump- tion/demand in Brazil. This report uses WRS data because they provide data time series for longer periods and for more countries than the Global Status Report on Road Safety (GSRRS). In the GSRRS, a slightly higher number of vehicles were reported than in the WRS. For example, in 2016, the WRS reported that there were 1.92 million vehicles in 194 countries, while the GSRRS reported that there were 2.05 million vehicles in 187 countries. The number of reg- istered vehicles provided by GSRRS is provided in figure A.2 (for mission values, the nearest historic data, or the nearest year was applied, if available). 103 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Figure A.2. Number of Registered Vehicles 2,500 No. of registered vehicles (Millions) 2,000 1,500 1,000 500 0 2006 2010 2013 2016 East Asia & Pacific Europe & Central Asia Latin America & Caribbean Middle East & North Africa North America South Asia Sum Sub-Saharan Africa Source: WHO 2009, 2013, 2015, and 2018. Motorization rates by region Figure A.3. Motorization Rates in East Asia and the Pacific Region Motorization rates in East Asia and Pacific region 900 800 Total motor vehicles per 1,000 population 700 600 500 400 300 200 100 0 M mar do g ya e Vi sia d Ze i a d m ilip m ng ts. m e a s ru an in Fe R n re ao p. a, i er nga a M ina oa a, lia Sa ia Ch Th Fiji re pe on L ine In on M est Am Si mo es n an Ch sia, o PD w ral s a Ph na Re ala ica po in go Ho d. S ac Da Jap m in aila ay ne Ch Gu Ko Tai K al n p -L Ne ust et Sa M Ch on ss al or e A m Ti a, ei un icr Br M Source: IRF WRS.* 104 Source: IRF WRS.* Source: IRF WRS.* Total motor vehicles per 1,000 population Total motor vehicles per 1,000 population Uz be 0 100 200 300 400 500 600 700 800 900 1000 0 100 200 300 400 500 600 700 800 900 1000 Az kist Ni Cub er an ca a No ba ra rth A ijan gu Bo a M lba liv ac nia ia ed Gu Pe M onia at ru ol em do Pa al v ra a M Se a g on rb te ia Ec uay ne u g Ho ado Be ro Do nd r la m ru in Co uras La s ica lo Slo tv n mb va Cro ia Re ia pu k R at b ep i a Gu lic u Figure A.4. Motorization Rates in Europe and Central Asia ya De bli Pa na nm c na Sw ark Ja ma m e Lit den Ur aica hu u an Co gua Fa Fin ia st y ro la aR e nd ica S Isla Cz witz nds Figure A.5. Motorization Rates in Latin America and the Caribbean Region Ar Chi ec er ge le h lan nt Re d i pu M na b ex Su ic Gr lic rin o ee am No ce e rw Motorization rates in Europe and Central Asia St Br ay . K G az Sp itt re il s n E ai Ca an ad Lu s t n ym d N a xe on m ia Motorization rates in Latin America and Caribbean region an ev bo Isl is an A u Lie nd rg ds ch or Pu Aru te ra er ba ns to te Ri in co CONNECTIVITY SERIES MOBILITY AND TRANSPORT 105 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Figure A.6. Motorization Rates in the Middle East and North Africa Motorization rates in MENA 800 700 600 Total motor vehicles per 1,000 population 500 400 300 200 100 0 West Bank Egypt, Arab Morocco Algeria Tunisia Jordan Lebanon United Arab Israel Bahrain Kuwait Qatar Malta and Gaza Rep. Emirates Source: IRF WRS.* Figure A.7. Motorization Rates in North America Motorization rates in North America 900 800 Total motor vehicles per 1,000 population 700 600 500 400 300 200 100 0 Bermuda Canada United States Source: IRF WRS.* 106 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Figure A.8. Motorization Rates in South Asia Motorization rates in South Asia 120 100 Total motor vehicles per 1,000 population 80 60 40 20 0 Bangladesh Nepal Pakistan Maldives India Afghanistan Sri Lanka Bhutan Source: IRF WRS.* Figure A.9. Motorization Rates in Sub-Saharan Africa Motorization rates in Sub-Saharan Africa 300 250 Total motor vehicles per 1,000 population 200 150 100 50 0 Rw ne Na ia r Za a yc a da Gu e i i am so Ke l a ut bia s Bu go Bo frica M lles rra pia m n Se a n Et di aw ga al rk ige iu qu e Se an ny an Ca ni oo b n a M in o an To rit ne m i Sie io Be ru he M aF al m Gh w Le Bu N bi er A h au M ts in h oz So Source: IRF WRS.* *Note: All data points for all countries are for 2018, except as listed below. 2017: Algeria, Burkina Faso, Cameroon, Greenland, India, Mozambique, Nicaragua, Panama, Philippines, Qatar, Sri Lanka, Timor-Leste, Tunisia, and Vietnam 2016: American Samoa, Andorra, Argentina, and Guinea 2015: Aruba; Faroe Islands; Guam; Guyana; Lao People’s Democratic Republic; Micronesia, Fed. Sts.; Nepal; St. Helena; St. Kitts and Nevis; South Africa; and Togo 2014: Fiji, Malawi, Namibia, Puerto Rico, Samoa, United Arab Emirates, and Zambia 2013: Ghana, Mali, Senegal, and Sierra Leone 107 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY References WHO (World Health Organization). 2009. Global Status Report on Road Safety: Time for Action. Geneva: WHO. https://apps. who.int/iris/bitstream/handle/10665/44122/9789241563840_eng.pdf. WHO (World Health Organization). 2013. Global Status Report on Road Safety 2013: Supporting a Decade of Action. Geneva: WHO. https://apps.who.int/iris/handle/10665/78256. WHO (World Health Organization). 2015. Global Status Report on Road Safety 2015. Geneva: WHO. https://www.afro.who.int/ sites/default/files/2017-06/9789241565066_eng.pdf. WHO (World Health Organization). 2018. Global Status Report on Road Safety 2018. Geneva: WHO. https://www.who.int/ publications/i/item/9789241565684. 108 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Appendix B: Experience with Vehicle Scrappage Programs Experience with vehicle retirement or scrappage programs stretches back at least 20 years, beginning with the Voluntary Accelerated Vehicle Retirement (VAVR) program in California in 1999. Since then, a wide range of programs have been tried around the world, with varying levels of investment and success. Subsidies for replacement of vehicles have ranged from US$240 per vehicle for light-duty vehicles (LDVs) to US$28,000 per vehicle for some heavy-duty vehicles (HDVs). Likewise, objectives have varied from targeting ozone precursors and particulate matter (PM) to specifically reducing greenhouse gas (GHG) emissions. A program in Beijing specifically targeted gross emitters identified with a yellow label, dedicating more than US$367 million to sub- sidizing the removal of very old, highly polluting vehicles. These resources followed a similar national initia- tive, which dedicated more than US$1 billion to subsidizing the removal of such vehicles. While the resources committed were high, an independent academic study estimated that the benefit-cost ratio of the Beijing investment was nearly 2.5. Table B.1 summarizes key aspects of some different scrappage programs. It is not intended to be an exhaustive survey of all scrappage programs, but rather suggests an order of magnitude of the resources involved. Table B.1. Characteristics of Some Key Accelerated Vehicle Retirement Programs from Around the World Scheme Country Years Vehicles Approximate How funded Mechanism Results covered by targeted per-vehicle sub- program sidy offered California: Carl United 1999– HDVs, LDVs ~US$28,000 per PTI/tire/vehicle regis- Managed through 24,000 vehicles Meyer States Present vehicle tration fees (US$141 grants to Air Quality replaced in first 12 million per year) Management Districts years, reduced ozone precursors by 100,000 tons and PM emis- sions by 6,000 tons Consumer United 2009 LDVs US$3,500 or US federal budget 680,000 LDVs Assistance to States US$4,500, depend- allocation (US$2.85 scrapped in one year, Recycle and ing on official billion) avoiding 9 million MT Save (CARS) fuel economy gap CO2 eq over 25 years between old and new vehicle National United 2007–16 HDVs and ~US$9400 per US federal budget allo- Administered 2009–10 grants Clean Diesel States non-road vehicle cation (US$300 million through competitive resulted in reduction Campaign diesel authorized, of which grants under four of 706 kilotons of CO2, vehicles US$12 million went to programs as well as reduction vehicle replacement in of other pollutants 2009 and 2010) Umweltprämie Germany 2009 LDVs €2,500 per vehicle German federal budget Replaced vehicles 2 million vehicles allocation (€5 billion) registered at least 9 replaced, reduce PM years and replaced and NOx, but CO2 by Euro 4 vehicle less benefit unclear than 1 year 109 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Scheme Country Years Vehicles Approximate How funded Mechanism Results covered by targeted per-vehicle sub- program sidy offered Prime à la France 2009 LDVs €1,000 per vehicle French national bud- Cars replaced must 470,000 vehicles casse get allocation (€550 be older than 10 scrapped in 1 year million) years. New vehicles must meet 160 g/ km CO2 emission requirement Cash for Greece 2011 LDVs Up to €2,800 per Greek national budget Cars replaced must 82,000 cars removed, clunkers vehicle allocation (€225 be older than 12 but only 34,000 cars million) years. New vehicles replaced must have engine capacity less than 2,000 cc Vehicle scrap- UK 2009 LDVs £1,000 per vehicle UK national budget Cars replaced must 400,000 vehicles page scheme allocation (£400 be older than 10 replaced, 25% reduc- million) years and registered tion in CO2 intensity by last owner for at on average least 12 months Vehicle scrap- Cyprus 2008 LDVs €730 per vehicle Cyprus national budget Cars replaced must 15,500 vehicles page scheme (avg.) allocation (€11.3 be older than 10 scrapped million) years. New vehicles must have max fuel intensity of 5 l/100 kms National China 2009–10 LDVs, HDVs US$980–US$2,940 Chinese national bud- Program targeted 459,000 vehicles Yellow Label per vehicle (average get allocation (US$1 “Yellow Label” scrapped through the scrappage US$2,270) billion) vehicles (designated program gross emitters). Was abandoned in 2010 because of cost and prevalence/attrac- tion of vehicle black market Beijing China 2008–10 LDVs, Small cars: Beijing municipal Program design More than 50,000 Yellow Label HDVs US$160–US$150 government budget reduced subsidy Yellow Label vehicles scrappage Med. cars: allocation (US$367 on average by 21% eliminated from city US$330–US$1,660 million) halfway through pro- in 2009–10. 7,000 Large cars: gram to encourage of these were not US$1,500–US$4,160 owners to act early destroyed but rather Small trucks: registered outside of US$130–US$1,000 Beijing. An academic Heavy trucks: study found a benefit US$250– US$830 to cost ratio of 2.49 for the program. 110 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Scheme Country Years Vehicles Approximate How funded Mechanism Results covered by targeted per-vehicle sub- program sidy offered Beijing China 2011–15 LDVs, LDVs: Beijing municipal Program targeted 266,000 vehicles Green-Label HDVs US$410– US$1,000 government budget older Green Label replaced scrappage HDVs: allocation (US$172 vehicles instead of US$830–US$2,410 million in 2011–12) Yellow Label vehicles Programa de Mexico 2004–15 HDVs US$5,300– Mexico national budget Program targeted Average of 2,600 Modernización US$12,400, allocation vehicles more than 10 vehicles per year del depending on years old. Covered up Autotransporte vehicle to 15% of replace- de Carga y ment cost of vehicle Pasaje Mexico City Mexico 2001–11 Urban US$7,700 per Mexico City govern- Program targeted Replaced a total of medium-size buses vehicle ment budget allocation pre-1995 buses to 4,576 buses bus replace- (US$34.56 million) be replaced by EPA ment scheme 2004-certified vehicle Cambia tu Chile 2009 HDVs US$8,000– Chilean Ministry of Program targeted Estimated CO2 emis- Camión (Swap US$24,000 depend- Energy (50%) and micro and small sions reduction of 100 your Truck) ing on vehicle private sector (50%) business owners with kilotons attributed to (amount spent annual revenue less program unknown) than US$25,000 ELV scrapping The 2009 LDVs €750–€1,750 per Dutch national budget Program targeted A total of just scheme Netherlands vehicle allocation (€85 million), vehicles older than 13 under 52,000 units with €30 million from years (gasoline) and scrapped. Estimated automotive sector, 9 years (diesel) CO2 emissions reduc- and €10 million from tion of 21 kilotons Amsterdam and the attributed to program Hague. ELV scrapping Slovakia 2009 LDVs €1,500 per vehicle Slovak national budget Program targeted About 44,000 units scheme allocation (est. €55.3 vehicles older than 10 scrapped. Estimated million) years subject to limit CO2 emissions of €25,000 for new reduction of 25 car replacement kilotons attributed to program. Cairo taxi fleet Egypt 2009–18 LDVs US$900 per vehicle, Egyptian national Program targeted The program has renewal plus subsidized budget allocation replacing vehicles 20 replaced about credit terms for (est. US$84 million). years and older 93,000 vehicles, purchase of new From 2013 on, car- of which about vehicle bon finance (CDM) 43,000 vehicles were generated revenues included under the on certified emissions CDM activity. On the reductions associated basis of CERs issued, with the project it is estimated that the entire program resulted in net CO2 reduction of at least 735 kilotons 111 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY Mobility and Transport Connectivity series: 2021 reports Accelerating Digitalization: Critical Do Speed Limit Reductions Help Road Actions to Strengthen the Resilience Safety?: Lessons from the Republic of of the Maritime Supply Chain Korea’s Recent Move to Lower Speed https://openknowledge.worldbank.org/ Limit on Urban Roads. handle/10986/35063 https://openknowledge.worldbank.org/ Available also in French. handle/10986/36109 World Bank. 2021. Mitra, Sudeshna; Job, Soames; Han, Sangjin; Eom, Kijong. 2021. Closing the Gap: Gender, Transport, Electrification of Public Transport: A and Employment in Mumbai Case Study of the Shenzhen Bus Group. https://openknowledge.worldbank.org/ https://openknowledge.worldbank.org/ handle/10986/35297 handle/10986/35935 World Bank. 2021. World Bank. 2021. Connectivity for Human Capital: To Pave or Not to Pave: Developing a Realizing the Right to Education and Framework for Systematic Decision- Healthcare through Improved Public Making in the Choice of Paving Transport in African Cities Technologies for Rural Roads https://openknowledge.worldbank.org/ https://openknowledge.worldbank.org/ handle/10986/35185 handle/10986/35163 World Bank. 2021. World Bank. 2021. The Road to Opportunities in Rural Adapting Mobility-as-a-Service India: The Economic and Social for Developing Cities: A Context- Impacts of PMGSY Sensitive Approach https://openknowledge.worldbank.org/ https://openknowledge.worldbank.org/ handle/10986/36626 handle/10986/36787 World Bank. 2021. World Bank. 2021. 112 MOBILITY AND TRANSPORT CONNECTIVITY SERIES Photo Credits Cover Page, page iii: Nurlan Mammadzada, Shutterstock Page ix: Fotorina, Shutterstock Page 1: Kwame Amo, Shutterstock Page 9: Adwo, Shutterstock Page 19: Trinn Suwannapha, World Bank Page 45: BELL KA PANG, Shutterstock Page 92: Sarah Farhat, World Bank Page 101: Henitsoa Rafalia, World Bank 113 MOTORIZATION MANAGEMENT FOR DEVELOPMENT AN INTEGRATED APPROACH TO IMPROVING VEHICLES FOR SUSTAINABLE MOBILITY