Thursday 27 June 2013

Unintended but predictable

Two years ago, the government proposed banning the import of used cars failing to meet the Japan 05 standard. This effectively banned the import of a large chunk of Japanese cars that, while old, were newer than the New Zealand fleet median age.

I expected that this would wind up encouraging those with older cars to hold onto them for rather longer, as relatively newer substitutes would become more expensive. Whether this wound up increasing or decreasing the average fleet age depended on how many held onto those older cars relative to the number who moved to buying rather more expensive newer cars instead of the 1998-2005 Japanese imports that had been pretty popular; that in turn would depend on the price effects. The regulation looked like it would wind up being pretty binding, at least for the first few years.

The New Zealand Herald now reports:
New Zealand car owners' reluctance to dump their old bangers is contributing to a growing national car fleet and making the roads less safe, the Motor Trade Association says.
Association spokesman Ian Stronach said it was the result of the large number of 1995 - 1997 registered used import cars which flooded into the country during the early 2000s. "Most of these cars are still being used and skew the age profile of our car fleet. Today, the average age of New Zealand's car fleet is 13.8 years; that is old by world standards and probably beyond the original design parameters of some models."
The average fleet age in 2010 was 12.88 years. So, since the regulation change, the average fleet age has worsened by a year. It would take more work to show that the change is due to the regulation, but we can say that the change is consistent with my prior "unintended consequences" hypothesis.

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