The Economy of Sending Junk Cars to Developing Countries

The Demand, Economics, and Environmental Impact

Secondhand vehicles at a car dealership in Harare, Zimbabwe, in 2012. Jekesai Njikizana/AFP/GettyImages

Many people associate junk cars with scrap yards and recycling facilities, where they disassemble and recycle valuable parts. However, developing countries still have a demand for many of these older and less efficient vehicles, despite their age and condition. This topic has long caught the attention of the UN, who published a 2020 report on the environmental impacts of the export of used vehicles in 146 countries.

In this blog post, we will examine the economy that supports the trade of junk cars to developing countries and the impact it has on both the sending and receiving nations.

The Demand for Used Cars in Developing Countries:

While many people in developed countries may turn up their noses at the idea of driving an old or damaged car, the opposite is often true in developing countries. In these regions, used cars are highly sought after, especially in areas where public transportation is limited or non-existent. For many people, buying a used car is the only way to get from point A to point B. As a result, the demand for used cars in developing countries remains high, even for vehicles that are considered not operational in the sending countries.

The Economics of Exporting Junk Cars:

In the developed world cars that are considered junk usually go to scrap yards or recycling facilities. For years these facilities have been exporting these vehicles to developing countries, where they can fetch a higher price compared to their country of origin. The economics of this practice is straightforward: it is often cheaper to ship the vehicle to a developing country than to recycle it locally. Therefore, exporting used cars has become a cost-effective pathway for vehicle retirement that requires little to no labor on the part of the individual shipping it.

The Environmental Impact of Exporting Junk Cars:

While exporting junk cars may be cost-effective, it is not without its drawbacks. One of the biggest concerns is the trade’s impact on the environment. To begin, just the mere transportation of these cars to their destination country has a significant carbon footprint

Further, weak laws surrounding the import of vehicles from abroad means that often there is no one regulating whether or not these vehicles have their emissions-reducing parts still attached. This aspect should be emphasized given the gasoline in developing countries has been said to contain significantly more sulfur, which causes concern for acidic precipitation. While the U.S. has legislation limiting the amount of sulfur allowed in its fuel, other nations do not.

Further, it is illegal in all 50 states to drive a car without a catalytic converter, which filters harmful emissions. The same cannot be said for many other countries (outside of the EU, Canada, Japan, Australia, and New Zealand). Given the rampant theft of catalytic converters in the U.S. and the growing demand for the precious metals they contain, the likelihood of cars being shipped abroad with their catalytic converters still attached is growing slimmer and slimmer.

The problem of developing nations having less stringent environmental regulations spills over into the recycling process. Concerns were raised regarding what happens to the vehicle once it does finally reach its end of life (EOL) point. Disassembly processes in other nations do not operate with the same emphasis on environmental standards and care for the toxic chemicals and automotive fluids. Not handled properly, vehicle disassembly can contaminate groundwater and leach into the surrounding soil. 

The Impact on Developing Countries:

Despite the environmental concerns, the trade of junk cars to developing countries can have a positive impact on their economies. The import of used cars creates jobs for mechanics, repair shops, and other related industries. Additionally, it provides access to transportation for people who might not otherwise have it. This point should not be taken lightly as the importance of transportation, particularly car ownership, to escaping poverty is undisputed

The trade also generates revenue for the countries that receive the cars, as they can be resold or dismantled for parts.

It should be noted that while this trade can positively impact the receiving countries’ economies it often does so by compromising users’ safety, both while in use and after the fact. There is a reason these vehicles were no longer allowed on U.S. roadways. These vehicles usually perform poorly and for only a short time, a class of vehicles that is commonly referred to as ‘disposable transportation’.

Junk Cars in Nigeria:

Nigeria serves as an example of the trade of junk cars to developing countries. In 2020, the country imported over 400,000 used cars, many of which came from the United States and Europe, where they were considered junk or no longer roadworthy. However, in Nigeria, these vehicles are repaired and sold, providing affordable transportation options for many people and leading to the growth of related industries such as spare parts sales and vehicle maintenance. Although there are concerns about the environmental impact of this practice, it has become an important part of Nigeria’s economy. As the demand for used cars in developing countries continues to rise, regulating the trade and minimizing its environmental impact will become crucial.

In conclusion, the economy of sending junk cars to developing countries is complex. While it can have a positive impact on the economies of and lives within these countries, it also raises concerns about the environment and sustainability.

As the demand for used cars in developing countries continues to grow, it is important that the trade is regulated and that efforts are made to minimize its impact on the environment.

This responsibility lies primarily on the receiving countries. After all, stringent policing of vehicle emissions throughout the nation is what has made the U.S. a catalytic-converter-required nation. This task is easier said than done, as nations in the developing world often struggle to establish the rule of law. And this, this is the core problem that individuals must tackle if one wishes to change this flow of vehicles.