Davos Agenda

How used car exports to Africa could become the development opportunity of the decade

Traffic during the morning rush hour in Johannesburg, South Africa.

Africa is the ultimate destination for 40% of used cars and that has a big impact on emissions. Image: Reuters/Siphiwe Sibeko

Maya Ben Dror
Industry Manager, Automotive and New Mobility & Advanced Manufacturing, World Economic Forum
Tilmann Vahle
Lead on Circular Mobility Solutions, Systemiq
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Davos Agenda

This article is part of: World Economic Forum Annual Meeting

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  • Used cars are often exported to lower income countries after 10-15 years in developed markets, meaning their emission levels tend to be higher.
  • Air quality degradation is driven by old cars in Africa, home to 40% of global used vehicles, and 80% of these do not meet basic emissions standards.
  • As we transition to electric vehicles, public-private collaboration is key to ensure this happens equitably in both the Global North and Global South.

In areas where government budgets for public transport infrastructure and operations are limited, the ability to move people and goods depends on the availability of affordable vehicles. Motorized transport is thus a lifeline, providing access to health services, to education and work, and to new opportunities.

While individual mobility is mostly covered with two- and three wheelers in large parts of low- and medium-income countries (LMICs), cars and vans, especially as taxis and other communal modes of transport, help offer mobility – and with it, social mobility.

High-quality used cars imported into LMICs could be (and already are) therefore an opportunity for such countries. However, the costs are becoming ever more visible: carbon emissions and air pollutants are on the increase, respiratory health conditions are on the rise, roads are unsafe.

While many developed markets are aligned on decarbonization of cars in the next 10-15 years, a truly just net zero transition requires accountability for the outdated carpool that LMICs are left with. And without decarbonization of road transport everywhere, such a transition is impossible.

“Getting more and more electric vehicles on the roads is critical to get to reach net-zero transport emissions quickly. This transition must happen around the globe," says Dr Young Tae Kim, Secretary-General of the International Transport Forum (ITF).

"Less-developed regions must not become dumping grounds for unwanted, polluting used vehicles. Preparing emerging economies to go electric will require international collaboration. ITF research on used car exports will help guide policy-makers to address the issue."

Not least, if no proper system is in place to recollect and recycle vehicles at their ultimate end of life, valuable resources are lost and severe pollution issues arise – most notably the terrible burden on up to 800 million children through lead poisoning, caused especially from ill-managed car lead acid batteries.

Whose responsibility is it? It is ours, collectively. "European nations have to stop exporting pollution to the Global South. A lot of responsibility lies with European and national governments that must close the – often – illegal export of old cars that are no longer fit for EU roads,” says Julia Poliscanova, Senior Director at Transport & Environment.

“European end-of-life of vehicles (ELV) rules are about to be reformed in 2023, which offers a key opportunity to tackle this. Digital tools are needed to trace car movements across and beyond Europe, and stricter penalties for illegal import of polluted vehicles.”

Here we summarise why and how we can drive equity on roads in both the Global North and the Global South, together.

Why should we care about used car exports?

Africa is the ultimate destination for some 40% of used light-duty vehicles. Central Asia receives another sizable chunk. Half of these cars do not meet the fuel economy, exhaust emissions, and safety standards imposed by their original home countries today.

Kept in use, they become a major source of particulate matter and nitrogen oxides. These pollutants exacerbate because fuel quality poured into these old engines is unregulated and, hence, poor. Conversely, poor fuels pose a challenge for more modern vehicles, so both issues need addressing simultaneously. The result is deadly for the many families practically living alongside roadways, as alerted by the World Health Organization.

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“Through emissions standards, emissions from cars, trucks, buses, locomotives, and other mobile sources – as well as gasoline and diesel fuel – can be reduced up to 99%. These regulations are not only critical to protect public health and environment for combating climate change, and instrumental in preventing over 40,000 premature deaths and hundreds of thousands of respiratory illnesses each year in the US alone,” says Margo Oge, who served at the US Environmental Protection Agency for 32 years, directing the Office of Transportation Air Quality for the majority of her career.

In developed countries, policies are set not only to regulate the quality of vehicles produced and sold, but also to encourage consumers to demand more efficient cars and drive less. That interplay of supply and demand efforts will not be as useful, nor fair, in emerging markets.

Many families rely on mobility offered with used vehicles due to their low price point, or as alternatives are often not on offer at all. Import dependency on exporting markets thus persists.

Used car exports increasing each year

The export of used cars increases every year. In 2015, 3.4 million used cars were exported globally, by 2019 this had increased to nearly 5 million.

The largest exporters are the US, Europe, Japan and South Korea, where approval for vehicle manufacturing and road-use regulations are most progressive.

Used Light Duty Vehicles Quantity and Flow to Main Destination Markets from the EU, USA, Japan, ROK (2020)
Used Light Duty Vehicles Quantity and Flow to Main Destination Markets from the EU, USA, Japan, ROK (2020) Image: UNEP

For example, about a decade ago, vehicles in Europe were required to consume a little over 5 litres of petrol per 100 km driven, or 130g CO2 per km.

The average fuel consumption in second-hand car market-dominated developing countries is almost 1.5 times that amount today.

Permissible pollutant emissions equally dropped sharply for newly sold vehicles. In other words, LMICs are two decades behind developed markets in terms of vehicle tailpipe emissions levels, with cars here emitting on average three times more pollutants.

Electric vehicles are projected to make up 70% and 50% of new car sales in Europe and the US by the turn of the decade. This transition will help address half of transport emissions in developed markets and is essential. Yet, without informed action, it will translate to intensification of the vehicle emissions gap between the Global North and South.

Not only will battery electric cars require charging infrastructure to enter the market – a challenge which even the richest nations struggle with so far – but they’ll also face ageing and end-of-life battery vehicles for which they are so far ill-equipped. The necessary circular governance and infrastructure need to be put in place quickly.

In 2020, the United Nations Environment Programme (UNEP) issued its first ever global overview report of the trade in used vehicles.

“Countries have to stop exporting vehicles that are no longer roadworthy and fail environment and safety inspections, while importing countries must adopt up-to-date regulations,” says Rob de Jong, the report author and Head of Sustainable Mobility at UNEP. “On the other hand, why have the importing countries been waiting so long to put in place some minimum harmonized standards?”

Many countries have weak car import rules

Following a thorough review of the regulatory environment in 146 developing and transitional countries, UNEP found that two-thirds have weak car import regulations. For example, the average imported used car age in Uganda was 20 years.

A positive signal is that, in early 2020, 15 West African countries signed an agreement to introduce an array of regulatory tools to improve air quality and mitigate emissions. Equally, most exporting countries lack sufficient export regulations that mitigate illicit dumping of vehicles that should rather be labelled waste and scrapped.

Supported by the Economic Community of West African States Commission, UNEP and other partners, the countries committed to introduce a sulphur fuel standard of 50 parts per million (ppm) for petrol and diesel for all imported fuels, as opposed to 10,000 ppm diesel fuels permitted in some cases previously.

They also committed to comply with vehicle emissions standards that Europe introduced in 2006 (EURO 4/IV): 4.2 litres per 100 kilometres by 2030 instead of current fuel economy standard of 7-9 litres per 100 km, and a five-year age limit for used vehicles.

This shows that with the right rules in place, LMICs can leapfrog the use of old, unsafe vehicles and progress to far cleaner and even electric vehicles, as well as better transport systems altogether.

“Emerging market vehicle demand is increasing, and so are consumer expectations for high quality mobility and services. It is therefore critical for exporting companies to collaborate more closely with importers to ensure supply meets demand. We are excited to exchange with core automotive players during the Annual Meeting in Davos, for addressing this challenge,” says Omar Al Futtaim, CEO of Al Futtaim Group.

Action urgently needed to meet UN SDGs

As the spotlight shifts to the Global South, so does the momentum for action by international organizations aiming to fulfil the United Nations’ Sustainable Development Goals (SDGs).

For example, the German Association for International Cooperation (GIZ), funded by the German government and working with corporates, has been supporting the hunt for the reasons behind the ‘lost vehicles’.

“International development institutions and partners must support developing countries in their efforts to regulate imports of used vehicles and establish and enforce vehicle safety and emissions standards,” says Binyam Reja, Transport Global Practice Manager at the World Bank.

“While exporting countries should collectively regulate their vehicle exports, we cannot simply expect developing nations to halt vehicle growth, which is essential to meeting their mobility needs for development. Motorization management is therefore an essential component of a sustainable mobility programme in developing countries.”

In sum, global trade of used vehicles is a boon: through it, vehicles remain in use for longer, making good use of the resources that were used to build them and they can also offer affordable mobility to those with smaller pockets.

Ageing used car fleets need decarbonizing now

But the downsides are increasing fast: the ageing fleets put people at risk and will need to be decarbonized fast in emerging markets as well.

The Zero Emission Vehicle Transition Council (ZEVTC) brings together ministers from governments that represent over 50% of the global car market and one quarter of the global truck and bus market," says Drew Kodjak, CEO of International Council on Clean Transportation.

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How is the World Economic Forum promoting sustainable and inclusive mobility systems?

"Council members have agreed to collectively address key challenges in the transition to ZEVs [zero emission vehicles], enabling the transition to be faster, cheaper, and easier for all. We are glad to support stakeholder collaboration for exploring measures to develop second-hand markets for ZEVs," he adds.

Existing multinational frameworks have been slow to respond due to the complex situation – innovative multi-stakeholder collaborations could step in and step up to accelerate action to ensure that global trade of used vehicles happens in a more responsible fashion, to contribute to well-being of people, decarbonization and circularity everywhere.

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