The problem of end-of-life automotive industry needs urgent attention

In order to encourage the retirement and renewal of old cars, on June 8, the Ministry of Finance and the Ministry of Commerce jointly issued the “2011 Scope and Criteria for the Discharge of Older Vehicles Retirement Renewal Grants”. The announcement stated that according to the scale of subsidies, the The urban suburban buses, rural passenger vehicles and advanced heavy-duty trucks that meet certain conditions and are scrapped in advance will be subsidized with a maximum subsidy of 18,000 yuan.

However, what is embarrassing is that under the subsidy, many scrapped cars have already been “missing”. It is understood that only 40% of the scrapped vehicles that should have been sent to auto scrapping and dismantling companies have entered the formal dismantling plant approved by the state, and the rest have gone unaccounted for.

According to statistics, during the ten years from 1999 to 2009, China’s automobile production has increased by 7.53 times, and the number of possessions has increased by 4.33 times. In 2009, the amount of automobile scraps only accounted for 2.61% of the current year’s automobile ownership, far lower than the write-offs of developed country write-offs. The rate is between 6% and 8%.

“Because of the great difference in recycling prices and the incomplete formulation of relevant policies in China, the level of policy implementation is not strong, resulting in many near-end retirement and end-of-life vehicles going to the 'black market.'” Liu Feng, Southwest Auto's auto industry analyst, accepts the “China Sankei” News reporter said in an interview.

Vehicles that have flown into the “black market” have either been resold to third or fourth-tier cities or rural markets and continue to operate, or they have been removed from the “black dismantling points” to return the available parts to the automotive market, causing major safety risks to road traffic and the environment. According to statistics, 13% of the traffic accidents in the past three years in the country were caused by the use of counterfeit and scrapped auto parts.

“The lack of effective legal constraints is the root cause of chaos in the automobile recycling and dismantling industry.” Liu Feng pointed out that the dismantling and recycling of automobiles is an industry in many developed countries and should be incorporated into the industry management, with specialized companies responsible for management, from scrapping. To become a waste product should have strict industry supervision.

It is an indisputable fact that the automobile recycling and dismantling industries are mixed. In fact, the state has issued a number of policies for the scrapped car industry. As early as 2001, the State Council announced the "Administrative Measures for the Retirement of Automobiles Recycled," the so-called Order No. 307, which started the standardization of China's automobile scrap recycling. At present, the Measures for the Administration of Auto Parts Remanufacturing and the Catalogue of Remanufacturing Industries led by the National Development and Reform Commission have also been formulated and cataloged in the same period. It can be seen that the relevant policies concerning the scrapping and recycling of automobiles have been in the process of formulation and revision. However, the regular scrap car recycling organizations still face the dilemma of insufficient scrapped vehicles, low profits, and difficult survival.

In an interview with the media, automotive expert Jia Xinguang stated that in foreign countries, automakers are explicitly required to take responsibility for the recovery of their production vehicles, or they must entrust them with relevant social organizations. Although China also has such a document, it does not have any evaluation system and it eventually comes into the form.

In response, Zhang Zhiyong, secretary-general of the National Automobile Service Committee Automobile Advisory Committee, said in an interview with a reporter from the “China Sankei Shimbun” that the relevant regulations of the Chinese government are not perfect and that it is an administrative pattern and uses administrative methods to deal with the market. The issue of change obviously has little effect. In order to smoothly develop waste car scrap, it is also necessary to rely on market forces to form an industry. Fundamentally, the recycling of scrapped vehicles will be marketized.