SBD’s Head of Technical for SBD Japan, Jeremy Worthington, talks about the possible effects of the recession on global car theft.

Q: The recession has caused unemployment to rise across many countries and consumer spending has dropped, especially for new cars.  How has that affected car thieves? 

Jeremy Worthington: Historically, we can see statistical links between unemployment rates and theft rates.  When times are difficult and earning money legally is difficult then some people are inclined to turn to dishonest means of earning a living.  So a rise in unemployment is often followed by a rise in theft rates. 

As an example, for the past 7 years the car theft rates in Queensland in Australia had been steadily declining, reducing by 50% over that period, but in the last quarter of 2008 the rate suddenly climbed in a complete reversal of the previous trend, and this has been attributed by the Australian NMVTRC to the pressures of the economic situation. 

We can also expect a rise in fraudulent insurance claims as drivers who struggle to sell their used vehicle pretend that it is stolen in order to claim the cash value.  These vehicles are often subsequently burned to try and prevent the fraud from being revealed, and to make it seem that the vehicle was taken for ‘joyriding’ purposes.  Fraud committed on higher security models is usually easy to detect as the theft methods required to steal these cars is not easily erased, and professional thieves capable of stealing them tend not to burn the vehicles.  However, this will raise pressure on insurance investigators if an increase in claims is to be prevented (and an increase in the theft rates if the fraud is not detected). 

Q: Does this mean that we can expect car theft rates to increase? 

JW: Most industry observers are cautiously predicting that the recent theft trend reductions will be affected by the recession.  Reductions in theft have been achieved by increased security, better awareness amongst drivers, and targeted schemes administered by action groups and police forces.  All of those positive actions will continue to have positive effects and cars will not become easier to steal as a result of the economy.  What is likely to happen is that the ‘soft targets’ will be sought after by a higher number of potential thieves.  Most of these will be casual thieves (especially those motivated into theft by economic hardship) who will not be able to defeat the high levels of security fitted to many modern vehicles.  We can expect the theft rate reductions to slow down, and in some cases start to rise again, especially in markets where the security levels of vehicles are low to begin with. 

Q: So newer models with better security that has been designed to meet the latest market requirements won’t suffer as much? 

JW:  Professional criminals will continue their efforts to make money through the theft and resale of stolen vehicles, or their components.  Professionals tend to target high value models where the profits are greater, and they employ increasingly sophisticated methods of stealing these cars.  In Russia, the police attribute over 80% of new car thefts to high technology attacks.  Russia is a somewhat high risk area though, and estimates across various Western European countries show that high proportions of new car theft are carried out by first stealing the vehicle keys (for example, analysis by the SCM in Holland shows that key theft is the method used for over 85% of thefts of vehicles under 5 years old). 

Q This sounds like a very sophisticated business? 

JW:  Yes it is, and it is often run alongside a legitimate used car or component resale or export business, so that the sale of the stolen cars or parts are more difficult to detect and customers are more easy to find.  Like any business though, the recession will squeeze profits, so it is possible that the legitimate side of the businesses will be difficult and customers will be harder to find.  FBI data in the USA shows that theft in the southern border states has reduced and that reduction is attributed to a reduced market for used cars across the border in Mexico as a result of higher fuel prices and economic hardship. 

Q So it’s not all bad news then? 

JW:  There are some other possible positive effects which are being caused by the actions of the car industry and governments to stimulate new car sales.  Scrappage schemes which offer a minimum trade-in value for any old model vehicle against a new car sale have been well received in Europe (and are currently being considered in Japan).  Although the proportions are quite low, this will accelerate the natural reduction in the average age of the vehicle parc.  Older models that pre-dated the latest insurance and legal security requirements are less secure so any reduction in the number of older vehicles will mean that there are less ‘soft targets’ for the thieves to choose from.  Although it would be expected that owners of these older models may not have the spending power to take advantage of the schemes, industry news from Germany attributes part of their recent 40% monthly rise in new vehicle sales to the success of their scrappage scheme. 

Q What other changes can we expect over the next few years? 

JW: As insurance claims costs rise as a result of fraud and injury claims as well as theft, then insurers will look for solutions that can reduce their costs, because raising premiums during a recession would be unpopular and difficult.  Thatcham (the UK insurance research centre) are promoting their security assessment schemes to insurers around the world, which have contributed to huge reductions in theft rates in the UK market, as a ready-made solution.  They have already been successful at getting schemes introduced in Sweden and Russia and are known to be in discussion with Holland and some countries within the ASEAN region.  If theft rates are affected, then we can expect insurance changes to follow. 

SBD research global theft rates, trends and insurance requirements and produce regular reports to explain what’s happening in specific markets. 

SBD also offer cost-effective consultancy services to analyse the specific threats affecting your products and to suggest strategies and solutions to lower the risk of theft.