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A System Dynamics Approach to the Car
Ownership Trend in Taiwan Urban Areas
by
Showing H. Young, Ph.D.
Associate Professor
Department of Business Management
National Sun Yat-sen University
Taiwan, R.O.C.
Iwan B. Santoso, Ph.D.
Associate Professor
Department of Information Management
National Sun Yat-sen University
Taiwan, R.O.C.
Paper Accepted for Presentation at the
International System Dynamics Conference 1988
to be held on July 6-7, 1988 ©
San Diego, California
U.S.A.
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ABSTRACT
The economy in Taiwan grew rapidly in the last decade. This
steep increase strongly affects its transportation system: the number
of cars in the urban areas increased dramatically. Some studies
forecasted that the number of car in Taiwan urban areas in 2000 will
be three times of that in 1984. However, those studies did not.
consider the feedbacks from the traffic and parking conditions to the
car ownership. In addition, some of the possible changes in the
system environment are also not being considered, such as the
increasing life expectancy of the car, the shortening car renewal
period and the more and more attractive car purchasing loans
policies.This study is an attempt to apply system dynamics
methodology to analyze the trend with the inclusion of feedback and
the above mentioned system environment changes. The results show
that due to the feedbacks from the limited capacity of roadway and
parking and the influence from the system environment, the number
of cars in urban areas will only be doubled in the year of 2000.
Although thé data for this research were very limited, by using the
system dynamics methodology we are able to have a better picture of
the future trend of the car ownership in Taiwan.
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INTRODUCTION
The economic growth in Taiwan, the Republic of China, in the
last decade was very impressive. The per capita income increased
about 8% per year [1]. This steep increase also affects the
transportation system in Taiwan, especially in the urban areas. The
number of cars increased dramatically; according to statistical data,
there were only 2.9 cars per 1000 people in Taiwan in 1965 but
increased to 64.6 cars per 1000 people in 1984 [2]. This car
ownership index is much higher in the urban area such as Taipei and
Kaohsiung which are the two largest cities in Taiwan. Based on car
registration data in Taipei, the increasing rate of number of car last
year was about 16% [3].
Some studies use statistical analyses, behavioral approaches and
economic models to estimate the future trend of car ownership [e.g.
4,5,6,7]. They forecasted that the number of car in Taiwan urban
areas in 2000 will be three times of that in 1984. However, those
studies did not consider the feedbacks from the traffic and parking
conditions to the car ownership. In addition, some of the possible
changes in the system environment are also not being considered,
such as the increasing life expectancy of the car, the shortening car
renewal period and the more and more attractive car purchasing
loans policies.
This study is an attempt to apply system dynamics methodology to
analyze the trend with the inclusion of feedback and the above
mentioned system environment changes. Our major objective is not
to estimate the trend more precisely than those studies, but to show
that the dynamic and contingent characteristics of this system and its
environment significantly influence the future trend.
THE MODEL
As mentioned earlier, the higher per capita income in Taiwan
will affect the condition of the transportation system in the urban
area. Car, which is considered as the most convenient transportation
mode, will be the main target for the people to purchase as their per
capita income grows. The purchasing power is increased due to the
higher per capita income and the attractive car loan policy which
will also make the purchasing power even higher: The higher the
purchasing power, the higher the demand to own a car and this will
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increase the number of cars especially in the urban area. This
condition, however is not favourable to the transportation system
which is limited, or slowly expanded due to the limited space and
other considerations. The traffic density in Taipei right now is so
high that the increasing number of car will only create more traffic
congestion. This condition will discourage people to drive or buy a
car as their transportation mode. Basically, the high traffic density
will urge the government to build more highways. But due to the
limited space of urban area in Taiwan, constructing new highways
are only about 3% per year [3]. These causal ‘elationshifps are shown
in Fig. 1.
More cars. require more parking places. When the’ parking
capacity is not enough to accomodate the parking demand, the
searching time for parking increases dramatically and discourages
the car purchasing behavior consequently. On the other hand, when
the parking problem gets more serious, the government and some
private company tend to build some off-street parking places to
satisfy the needs. Nowadays most of the cars in Taiwan are still
parked on the street [7]. However, when the volume/capacity ratio of
traffic exceeds a certain level, in order to increase the road area for
traffic, curb parkings are prohibited. The causal relationship
between parking and the growth of cars is shown in Fig. 2..
The quality of car in Taiwan was quite improved after 1981 due
to Japanese technology transfer which lengthen the average car
expectancy and reduce the average car price accordingly. The
high-income people tends to renew their car more frequently and the
attractiveness of car loan policy will enhance the tendency as well.
In addition, we have noticed that the society's peer pressure in
Taiwan tends to shorten the average car renewal period. The more
frequent car renewal will lower the price of second hand car and
subsequently reduce the average car price. This description is shown
causally in Fig. 3.
COMPUTER SIMULATION
BASE RUN
The simulation model is run from 1980 to.2000. Fig. 4 shows the
result of the base run, in which we assume that the average car life
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Attractiveness Purchasing Car
of Car Loan Power Demand
Policy |
Per Capita Traffic Car Increasing
Income S Density NN Rate
Roadway Roadway Number
Availability *—— Construction of Cars
Fig. 1 Traffic-Related Causal Diagram
Car Increasing Number » Parking
Rate ” of Cars Demand
Road Area Parking hi
for Traffic Demand/Capacity Construction
{fo | |
Road Area Parking Off-Street
for On-Street Capacity Parking
Parking Capacity
Fig. 2 Parking-Related Causal Diagram
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Quality of _ Average Car » Average
Car Life Expectancy Car Price
Society's Average Car Car
Peer Pressure Renewal Period Demand
High-Income New Car Attractiveness
People © Purchasing of Car Loan
Power Policy
Fig. 3 The Influences of Life Expectancy
and Renewal Period to Car Demand
CAR (1) DEMAND(0)
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1980 1990 2000
Fig. 4 Base Run
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expectancy is a constant of 8 years and the average car renewal
period is set to be 6 years. The car loan policy is assumed not
significant enough to be considered. It can be seen that although the
demand fluctuates, the number of car is still growing steadily and the
total number of car will be about 540 ,000 in the year of 2000.
SCENARIOS
Scenario 1: Increasing Life Expectancy of the Car
Referring to Fig. 5, we can see that increasing life expectancy will
increase the number of car. This happens because the cars stay longer
before they are removed from its service. The estimate number of
car in the year 2000 is 575 ,000.
Scenario 2: Shortening Car Renewal Period
It can be seen from Fig. 6 that the shortening car renewal period does
not affect very much the number of cars as we compare with base run
in Fig. 4.
Scenario 3: More Attractive Car Loan Policy
The car loan policy which started to be effective in the year of 1986
gives a sudden impact to the demand and the increasing rate of car,
but the trend does not continue on its track as the demand of car are
affected more by the limited growth of highways and parking spaces.
The result of this scenario is shown in Fig. 7.
Scenario 4: Combation of Scenarios 1, 2 and 3
It can be seen from Fig. 8 that the impact of car loan policy is very
effective at the time when this policy is just being introduced , and
due to the higher car life expectancy, there will be more car in the
year of 2000 (about 585 ,000) as compared with the base run.
POLICY TESTING
The following policy tests are conducted to scenario 4 only, since
this scenario is considered as the most reasonable one.
Policy 1: Parking Place Enforcement
Government is considering to apply the parking policy -- "The car
buyers are obliged to have a parking place before hand" -- in order to
minimize the parking problem in the urban area. Most of the
residential area in Taiwan has no parking area. Applying this policy
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DEMAND(0)
CAR (1)
2000
1990
1980
Fig. 5 Scenario 1 - Increasing Car Life Expectancy
DEMAND(0)
CAR (1)
2000
°
o
co
Fig. 6 Scenario 2 - Shortening Car Renewal Period
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DEMAND(0)
CAR (1)
Fig. 7 Scenario 3 - More Attractice Car Loan Policy
DEMAND(0)
CAR (1)
Fig. 8 Scenario 4 - Combination Scenarios 1,2 and 3
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will make the people think twice before they buy a car. The costly
land price in the urban area makes the parking place also expensive.
Usually the price is as expensive as the car price itself. The high price
of parking space really affects the car demand and the number of cars
subsequently as shown in Fig. 9. Based on this policy, there will be
only about 550,000 of car in the urban area.
Policy 2: Curb Parking Prohibition
When the volume/capacity of traffic exceeds a certain level, curb
parkings are prohibited to increase the capacity of roadways for
traffic.The result is shown in Fig. 10. This policy slightly affects the
pattern of car demand and the number of cars as compared to Fig. 8.
But the estimate number of car in the year 2000 is much higher, i.e.
634,000. This happens because the increasing rate of off-street
parking is faster than the road construction.
Policy 3: Transportation System Management
Transportation System Management measures such as ridesharing,
exclusive bus lane, staggered working hour, etc. might be applied in
the future to avoid the traffic congestion in the urban area. This
policy is intended to better use of the existing urban streets. From
Fig. 11, it can be seen that the effect of this policy is not very
significant (about 570,000 cars in 2000).
Policy 4: Combination of Policies 1, 2, and 3
Applying those three policies will reduce the demand significantly in
1988, but afterwards the trend does not vary that much as compared
to Fig. 7. It is shown in Fig. 12 that applying all policies: will not
reduce the number of cars as much as policy 1 does, since policy 2
may attract more people to have cars.
DISCUSSIONS
As mentioned in the introduction, some studies forecasted that the
number of car in Taiwan urban areas in 2000 will be three times of
that in 1984. However, the above simulation results show that due to
the feedbacks from the limited capacity of roadway and parking and
the influence from the system environment, the number of cars in
urban areas will only be doubled in the year of 2000.
Although the data for this research were very limited, by using
the system dynamics methodology we are able to have a better
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DEMAND(0)
CAR (1)
r= 5 Ee K bk E b
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ae
1990
1980
Fig. 10 Policy 2 - Curb Parking Prohibition
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DEMAND(0)
CAR (1)
1990
1980
Fig. 11 Policy 3 - Transportation System Management
DEMAND(0)
CAR (1)
Fig. 12 Policy 4 - Combination of Policies 1,2 and 3
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picture of the future trend of the car ownership in Taiwan. The
model is far from complete and it is open for further studies.
REFERENCES
1. Economic Research Institute, Academy Sinica, the Republic of
China, Taiwan Economic Forecast, Vol. 17, No. 1, Taipei,
Taiwan, R.O.C., April 1986 (in Chinese).
2. Statistics Division,the Department of Economics, the Republic of
China, Statistical Data of the Republic of China, 1985, Taipei,
Taiwan, R.O.C., 1985 (in Chinese).
3. China Times Daily, November 23, 1987, Taipei, Taiwan, R.O.C.
(in Chinese).
4. Chong, Fu-yuan, "A Study of the Small Car Market in Taiwan,"
Bank of Taipei Monthly, Vol. 14, No. 2, Taipei, Taiwan, R.O.C.,
February 1983 (in Chinese).
5. Dai, Chien-ting, “A Study of the Purchasing Behavior in Taiwan
Automobile Market," Taiwan Automobile World, No. 98, Taipei,
Taiwan, R.O.C., October 1985 (in Chinese).
6. Economic Construction Commitee, Executive Yuan, the Republic
of China, The Outlook of the Economic Construction in the
Republic of China, 1986-2000, Hepes Taiwan, R.O.C., May
1986 (in Chinese).
7. Transportation Research Institute, the Department of
Communication, the Republic of China, Integrated Parking
Planning for the Five Urbanized Areas in Taiwan, Taipei,
Taiwan, R.O.C., October 1985 (in Chinese).
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