Microdots could hinder professional car theft

New study indicates microdots could deal economic body blow to professional car theft industry

A Government policy to have tiny microdots sprayed onto on all newly registered cars and light commercial vehicles could deal an economic body blow to professional vehicle theft, a new cost benefit study indicates.

Cabinet will consider an officials' cost benefit analysis in March before making a final decision to go ahead with the whole of vehicle marking (WOVM) policy it adopted in December 2004. The policy involves spraying about 10,000 microdots, each containing a vehicle's unique identification number (VIN), onto various parts of all newly registered passenger and light commercial vehicles under 15 years old. It is part of a strategy to attack the country's second largest crime vehicle theft. The Ministry of Justice and Police expect it to significantly reduce organised car crime, based on experience overseas.

A new cost benefit analysis of the policy has been prepared by mircodot manufacturer DataDot Technology Limited (DDT), and indepedently reviewed by Pricewaterhouse Coopers.

DDT says it has prepared the analysis to assist those commissioned to prepare the Government's cost-benefit evaluation and to inform the wider public of the company's assessment of the costs and benefits of the Government's WOVM policy.

PricewaterhouseCoopers' covering report says the assumptions in the analysis are reasonable and confirms the anti crime initiative "should have a positive present net value and its benefits exceed costs after six years".

DataDot Technology New Zealand Limited's Managing Director, David Lumsden, says it is important to recognise that, although the cost-benefit model uses the actual cost of $47.00 to apply 10,000 DataDots to a single car, it does not predict the exact total of actual costs and savings. This is because modeling cannot predict precisely how many cars will be imported or take into account all the possible factors that will impact future theft rates or vehicle volumes, or even quantify all the benefits.

"It is not possible, for example, to put a precise value on the improvement in police clean-up rates brought about by being able to identify stolen vehicle parts easily. But an analysis is useful to inform policy debate by showing how costs and benefits are likely to vary in relation to each other under the influence of different assumptions and data," he says.

The analysis assumes a total New Zealand fleet of 2.275 million passenger and light commercial vehicles, increasing by 2.5% a year. The latest official statistics show 24,089 vehicles were stolen in 2005-2006, up 15.5% on the previous year. The number of stolen but not recovered is 7227. Of these the analysis assumes 6504 are stolen by professional thieves.

Based on the Justice Department's estimate that professional vehicle car crime accounts for 30-40 percent of vehicle crime, and that professional thieves are responsible for most unrecovered stolen cars, the analysis assumes that 6504 a year are stolen by professional thieves. By comparison, the Australian stolen-unrecovered rate is 27%, which, together with recovered and stripped vehicles, is ascribed to professional crime.

Using New Zealand Treasury's assumed value of $13,000 per stolen vehicle (including both private and public costs), and with theft rates remaining constant each year, the model puts the value of vehicles lost to professional criminals at $80.33 million a year. The cost of WOVM, at $47 per vehicle, is $10.99 million a year. DDT says the use of robots to spray on its patented DataDots could reduce the application cost from $47 to $33 per vehicle at the biggest import centre, but the higher cost is used in the analysis.

The analysis assumed 86% of the nation's vehicle fleet will be marked after 10 years.

It says an independent evaluation by the Australian National Motor Vehicle Theft Reduction Council reports sustained rates of theft reduction attributable to WOVM of between 60% and 90% for marked models compared with the same brands' unmarked models.

The DataDot analysis for New Zealand conservatively estimates WOVM's impact on professional theft rates at 50%.

The discounted net present value savings of WOVM will be $112 million over 10 years, according to the analysis model.

Mr Lumsden says WOVM has dealt a body blow to organised car crime gangs where it has been used overseas.

DataDot's technology has been applied to several vehicle models in Australia, South Africa and other countries. A WOVM policy is now also being prepared in the European Union.

All vehicle owners will benefit from WOVM in the form of lower insurance premiums. Some insurance companies are already offering 10% premium cuts and nil excess on claims for trailor boats and motorcycles using DataDots in New Zealand.

The analysis was this week provided to Cabinet Ministers and the Police and Justice Departments and Ministry of Transport. Officials from these departments are understood to now be working on the March paper for Cabinet.

A full copy of the cost benefit analysis is available at www.datadot.co.nz

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