The Challenges of Importing Hybrid Cars
Fiji does not have the capacity to recycle lithium-ion and nickel metal hydrate batteries.
These rechargeable batteries power hybrid vehicles with a 240 bolt AC (alternating current – a type of electrical current).
The other type of battery used in hybrid cars, which also powers other vehicles, is lead-acid.
Lead-acid battery is recycled Fiji.
Fiji imports most of the used-hybrid cars. They dominate our roads.
Majority are imported from Japan, one of the biggest hybrid car manufacturers in the world.
The surge in importation of hybrid vehicles was evident six years ago when the Government announced a reduction on fiscal duty for used hybrid vehicles.
This Government initiative was to promote the use of fuel-efficient hybrid and electric vehicles to reduce fuel importation and protect the environment.
A paper published by the Australian Institute of Business in August 2020 said new car registrations in Fiji had significantly increased in 2014 because of the new tax reforms.
“The total numbers of cars registered rose from 89,000 in 2013 to almost 120,000 in 2018, an increase of 35 per cent.
“In 2013, about 7600 cars were newly registered. In 2014, this number rose to 10,800 and to more than 14,300 in 2018,” the publication outlined.
Latest figures obtained from the Land Transport Authority reveal that there are 131,305 registered vehicles on our roads.
For December 2020 alone, 788 vehicles were imported into the country. Vehicle carrier Tokyo Car brought in 175 vehicles on December 15. The next day, Frontier Ace shipped in 150 vehicles.
Just two days before Christmas, vehicle carriers Grand Quest and Meridian Ace brought in more than 400 vehicles.
Grand Quest discharged 183 vehicles and Meridian Ace 280 vehicles.
While owning a vehicle or vehicles may be a sign of economic prosperin ity, placing some sort of control on the importation of used car will help alleviate road congestion experienced in our main centres, including Labasa.
Also, finding viable solutions for recycling hybrid car batteries and vehicles must be prioritised to avoid detrimental environmental effects.
ENVIRONMENTAL IMPACT
The battery produced initially for use in vehicles contains hazardous substances, particularly lead and sulfuric acid.
These hazardous substances can contaminate the waterways if they are not properly disposed of.
In lithium batteries, there are 160 different chemistries. These explosive chemicals are dangerous, if they are not properly disposed of.
Pacific Batteries in Lami is the only company in the region that recycles lead-acid.
On an average monthly basis, the company receives 40,000 to 60,000 tonnes of used lead acid batteries.
These batteries include those shipped from Papua New Guinea, where a sister company is based. On other occasions, used lead acid batteries are shipped from across the region.
Under the Waigani Convention, hazardous waste from Pacific Island Forum Countries must be shipped to the nearest recycler.
On a monthly basis, Pacific Batteries recycles about 200,000 tons of used lead-acid from Fiji.
The company has recycled only 5 per cent of the starter batteries in hybrid vehicles.
Pacific Batteries began operation in 2009. Their latest recycling plant was opened last year.
Their work involves:
Cutting open the batteries before neutralising the acid in their fluid treatment plant;
The lead and terminal in batteries undergo melting under high temperature, then further refining takes place, before the new batteries are produced;
These new batteries are sold for $140 to $500 each; and
The battery containers, which are made of polypropylene plastic, are recycled into chip and exported to Spain.
The company’s production manager, Ashnil Deo, said the main reason they were recycling batteries was because of their corporate social responsibility.
“Our engineering team monitors gases that are released. When you recycle lead acid batteries, the main gas that will be emitted is sulphur dioxide,” he said.
“Every quarter, we send our water sample to the University of the South Pacific lab to see where we stand, because our water requires a certain standard for battery making. You cannot just put the tap water anyhow; you have to remove all the ions.”
DEPARTMENT OF ENVIRONMENT
Pacific Batteries works closely with the Department of Environment.
Mr Deo said the Department monitored their processes. They took water samples from the company’s treatment plant.
Permanent Secretary Joshua Wycliffe said the department had factored in the importing of hybrid vehicles into its future plans. Already the department was at its final stages of establishing a suitable technology at the Naboro Landfill to handle the management of waste(s), including from the automobile industry.
“The Department of Environment is also sharpening policy measures that are futuristic - in response to the shifting demands from the Waste Management sector,” Mr Wycliffe said.
VEHICLE DEALERS
Vehicle dealers agree on one thing, there’s stiff competition in the local market – particularly for secondhand car dealers.
In 1992, one of the pioneers of second-hand car dealers in the country, GM Motors, was the only operator in Nausori.
Today, owner Mumtaz Ali said he had made a loss of more than $30,000 in the past three consecutive years.
From previous sales of 100 cars per month, the number has dropped to 20 cars per month.
This is also the same for the number of imported vehicles.
The spike in used car meant low profit margins.
“Before it was $4000 to $5000 margin for a Toyota, but now it’s a $1000 dealers to $1500 margin,” he said.
For Carpenters Autofield (Nakasi branch), vehicles imported before COVID-19 are still outside their yard.
Manager Kamal Singh said there was less demand in the market. Reducing their imports from 100 vehicles to 10 vehicles a month was the best option.
Japanese-manufactured secondhand vehicles are sold at Autofield. He said demand for hybrid vehicles surged from 2015 onwards because there was zero import duty and they were environmentally friendly. “When these hybrid cars are manufactured in Japan, the batteries have a life span of 10 years from the date of manufacture,” Mr Singh said.
“If the car has exceeded 10 years, then you will have to change the battery cells.”
COVID-19 hasn’t spared the industry.
One hundred and forty workers lost their jobs at Carpenters Motors, with the remaining on a 40 per cent reduced salary.
Financing companies are also strict about financing car loans. Mr Singh said this had affected the businesses.
Nivis Motors operations manager Niroshna Perera said people’s buying power had declined.
Nivis Motors sell firm out vehicles imported from Japan based on their annual budget. But there is competition from second-hand car dealers.
TAXATION COMPANY
Viti Customs owner Emmanuel Lazarus said he had noted an increase in personal importation of vehicles.
The company is a two-year-old business that deals with paperwork and documentation for importers. Mr Lazarus has been working in the industry for the past 23 years.
Personal importation is on the rise because of the reduction in duty, he said.
“When people buy directly from Japan, the total price of the vehicle is less, compared to buying it from car dealers here,” Mr Lazarus said.
Most used cars, he said, have exceeded their life span before being imported.
“Imagine if all these unregistered vehicles still parked outside the yards of car dealers all used the
road, what will happen, even our road condition is not good to cater for so many cars.”
GOVERNMENT POLICY
In the 2020-2021 National Budget, Government had announced new tax incentives for hybrid and nonhybrid vehicles.
These reforms included:
Lifting of age restriction on nonhybrid vehicles provided they are of EURO 4 standard (Euro 4 fuel focuses on cleaning up emissions from diesel cars;
All imported hybrid vehicles were to be no more than five years old; and
A reduction in Environment and Climate Adaptation Levy from 10 per cent to five per cent.
In the five-year and 20-year National Development Plan report, the
Government outlines its support for used hybrid vehicles.
“Government will support importation and use of fuel-efficient hybrid and electric vehicles to reduce fuel importation and protect the environment,” the report said.
VEHICLE OWNERS
COVID-19 has also impacted people’s choice of investing in cars.
It doesn’t help with the deteriorating road condition, vehicle owners say.
Toyota Excel driver Ashwin Kumar said as the population increased, so were the people’s buying power, hence the need to improve infrastructure.
Mr Kumar bought his car worth $28,000 and has been driving it for five years. Changing two tyres of his vehicle last month cost him $350 to $400. He said vehicle was also expensive.
Another vehicle owner Rachael Naidu said the socio-economic impact of banning the import of second-hand vehicles must be considered.
“You don’t want to deprive people at the lower end of the socio-economic scale from owning a vehicle because these vehicles are affordable, compared to new ones,” Ms Naidu said.
Jyotika Nand and her family own five cars. She said people invested in cars because it was convenient, affordable, fuel was cheaper than taxi fare, and personal attachment. Shameer Khan said his wife was required to provide two guarantors when applying for car loan recently. This was not a requirement when he had applied earlier. Mr Khan said the number of vehicles on our roads simply meant road congestion.
“At one time I was stuck in traffic from 6am in Nakasi and reached Suva at 8:30am,” he said.
VEHICLE LOANS
Bank policies for borrowers have not changed during this COVID-19. However, borrowers will be assessed on the fresh statement of income and committed expenditure during COVID-19.
Association of Banks in Fiji chairman Rakesh Ram said: “Generally upfront per cent equity is required, together with the borrower meeting the respective banks’ credit assessment criteria.
“This COVID-19 has made people rethink their priorities.”
Mr Ram said some borrowers were currently on special COVID-19 arrangements with their bankers for their existing loans.
WAY FORWARD
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Lithium-ion and nickel metal hydrate can be recycled in Fiji, but it requires a huge investment.
Given the current economic climate, it would be uneconomical to recycle these batteries locally.
China and the United States of America are two of the countries that have recycling plants.
Pacific Batteries has been in dialogue with American company – Global Tech Environment – on ways to recycle these two battery types. An outcome of the two-year dialogue should be known in a few months’ time. A fruitful outcome would mean Pacific Batteries collecting and shipping these batteries to America.
In turn, America exports these new recycled batteries to manufacturers.
Mr Deo said there’s a possibility to expand Pacific Batteries, if the demand for car batteries rises.
To our readers, Shine A Light will be taking a break and will resume next month.
Edited by Rosi Doviverata