Editorial | Reform car prices, now

The government has already shown itself willing to push through difficult reforms. It should turn its attention next to car prices

Danes pay some of Europe’s highest prices for cars. And it shows. Take a close look at the cars on the road, and you’ll see that many are past their prime. By most calculations, the average age of cars in Denmark is among Europe’s highest.

This could be because Danes are simply thrifty, choosing to drive a car for as long as possible before swapping it out for a newer model. Unfortunately, the reason is that the pricing system, which makes cars prohibitively expensive, forces people to keep their cars on the road long after common sense would have dictated otherwise.

The goal of Denmark’s pricing system, which charges up to 180 percent of the car’s value in registration fees, is to prevent people from driving by making it expensive to purchase a car. And in many ways, this has been a success. 

Coupled with readily available public transort and a highly developed network of cycleways, it has resulted in lower rates of car ownership. And that’s a good thing. Whether you subscribe to climate change theories, or are just concerned about clean air, unnecessary fuel consumption or the population’s general health level, having fewer cars on the roads has numerous benefits. 

During a period when the pace of improvement in car fuel efficiency was comparatively slow, it might not have made that much difference that this was accomplished thanks to a system that resulted in people hanging on to their cars longer than elsewhere. Today, though, it is simply a regressive tax that makes it all but impossible for the average family to be able to afford modern, safe, efficient vehicles.

Moreover, as a source of revenue, registration fees have another shortcoming: as people increasingly turn towards smaller, less expensive cars, the income the fee generates declines. In an era when saving the climate is all the rage, and seeking relief from high fuel prices is a priority for most, this is unlikely to change any time soon.

Given everything that the registration fee has going against it, it would seem to be an obvious area for a reform-minded government that has chosen to pursue a number of activist climate polices to take action in. Alternative forms of transport should continue to be encouraged, but that should be done by making it expensive to drive, not purchase a car.

Commuters will, of course, be put off by the suggestion. And there is no guarantee that the government wouldn’t try to implement a charge on driving and keep high registration fees. But if it can avoid the temptation to hit drivers with a double whammy, and if they can address the legitimate privacy concerns, we might wind up seeing, if not a new car in every driveway, then at least more efficient ones on the roads.