• Costa Rica Real Estate

Costa Rica announces clunker buyback program to finance fuel efficient cars

March 5, 2015

The Environment Ministry (MINAE) announced a new program Wednesday designed to incentivize Costa Ricans to scrap their old, inefficient cars and trucks in exchange for new hybrid and fuel efficient vehicles.

The program presented by Environment Minister Edgar Gutiérrez, alongside representatives from Banco de Costa Rica, the National Insurance Institute (INS) and the Association of Vehicle and Equipment Importers (AIVEMA), offers “favorable” financing and insurance discounts to drivers who junk their old vehicles and buy new, fuel efficient cars. Interested buyers can start the process Thursday at the Expomóvil 2015 car show at the Centro de Eventos Pedregal in Belén.

More than 50 models have been approved for financing under the program, based on European efficiency standards, including brands ranging from the Hyundai Accent to the Volkswagen Tiguan TDI and Lexus ES300H.

If Costa Rica is serious about meeting its 2021 carbon neutrality goal, it will have to address the transportation sector, Environment Minister Gutiérrez said, which is responsible for nearly 32 percent of CO2 emissions and 67 percent of fuel consumption in Costa Rica.

Officials said vehicles on the road that are older than 15 years – and there are many — can pollute up to five times as much as new models.

“It’s time for Costa Ricans to start thinking beyond the color and make of their car, and start thinking about how much carbon dioxide it emits,” Gutiérrez said when announcing the program at the Banco de Costa Rica in downtown San José.

BCR’s assistant manager for finance and administration, Leonardo Acuña, said that the public bank has set aside $20 million in financing for the project. Buyers willing to turn in their old car can finance a new one with no money down.

This is not the first time the government has tried to push Ticos to consider hybrid and high efficiency vehicles. But the new program has broader offerings and financing than a previous initiative launched in October 2013 under then-Environment Minister René Castro.

AIVEMA President Óscar Echeverría said that the private sector is excited about the program because of the wide range of people who could benefit from it, beyond those willing to buy electric or hybrid vehicles. High efficiency cars are also covered under the financing program.

Gutiérrez said the program was a work in progress and that changes would be made based on the public’s reception. One question officials did not have an answer for was how the government or private sector would recycle all the clunkers they want to take off the road, including the safe disposal of batteries, oil and other toxic chemicals found in vehicles.

Environmentally-minded car buyers can look forward to better financing deals and discounts on insurance, but officials said there was no assistance currently available when it comes to paying the marchamo — the annual vehicle circulation tax.

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