Clampdown on cars

South Africa’s automotive industry, in conjunction with the SA Revenue Service (Sars), police and law enforcement agencies, is intensifying its efforts to address the scourge of illegally imported vehicles in the country.

National Association of Automobile Manufacturers of South Africa (Naamsa) CEO Mikel Mabasa said an estimated 300 000 of the 12.7 million vehicles on South Africa’s roads are illegally imported vehicles.

Mabasa said Naamsa is deeply concerned about the impact of these grey vehicle imports because they without a doubt displace new car sales.

“To put this into perspective, the monthly average new vehicle market for 2020 is 28 500 units. Grey imports represent an extra month’s sales per annum, which represents 7.5% of the total market and would … [make them] the third largest brand in South Africa by volume,” he said.

Mabasa added that the number of illegal grey vehicle imports in South Africa is growing by 30 000 vehicles a year.

“Based on the suite of taxes applicable to new car sales locally, Naamsa estimates that this is costing the fiscus R3.8 billion a year,” he said.

Mabasa said grey vehicle imports have a negative impact on the automotive ecosystem because they rob the fiscus of the much-needed tax revenue, hurt job creation, aid criminal activity, and undermine road safety initiatives.

Sars reported last week that the Inter-Agency Working Group on the Illicit Trade, which includes Sars, the Department of Trade, Industry and Competition (dtic) and other law enforcement agencies had crushed 57 illegally imported second hand vehicles.

Sars Commissioner Edward Kieswetter said the crushing of the illegally imported vehicles is a warning to those who continue to practice this illegal act.

Kieswetter warned unsuspecting buyers to ensure that what they are paying for is legal or their vehicle could be confiscated by the state.

Deputy Minister of Trade and Industry Nomalungelo Gina said the government will stop at nothing when confronting this scourge to protect local manufacturing, which contributes more than 7% to the country’s GDP and is an important employment creator.

“Buyers of these vehicles must realise that they are killing jobs and destroying the capacity of our economy to produce prosperity for all citizens.

“Government is absolutely determined to deal with this blatant disregard of our country’s laws and the safety of road users,” she said.

Sars said the proliferation of second hand motor vehicles into the country from Europe and Asia also poses a safety threat when used within South Africa because these vehicles are not manufactured for the local environment and do not go through proper safety processes, such as roadworthy tests.

The importation of second hand imported vehicles into South Africa is mainly allowed for the purpose of resale to foreign countries, with a few exceptions, such as collectors’ cars.

An import permit from the International Trade Administration Commission (Itac) is required before the vehicles may be imported into South Africa.

However, Itac does not issue permits for the importation of second hand vehicles for use on South African roads, which means a second hand vehicle may not be imported and registered locally.

Sars’ Illicit Trade Unit has intensified its enforcement activities in this area in recent years because of the increase in second hand vehicles in South Africa, resulting in detentions and seizures of illegally imported vehicles that were eventually forfeited to the state.

The clampdown by Sars on illegal second hand vehicle imports resulted in 77 seizures of illegally imported vehicles in 2017/18 but this increased to 169 vehicles in 2018/2019 and to 256 vehicles in 2019/20.

Mabasa said Naamsa’s estimates of the 300 000 illegal vehicles in South Africa and the 30 000 a year increase in these illegal vehicles on the country’s roads is based on data obtained from a company in Durban it has commissioned to do this work on Naamsa’s behalf and on police statistics.

He said the majority of these illegal vehicles entered South Africa through the Port of Durban and were for transhipment to landlocked neighbouring countries such as Botswana, Eswatini (Swaziland) and Lesotho, but never ended up in those countries.

Mabasa said the paperwork for the importation of these vehicles was above board but criminal syndicates have become more sophisticated and intelligent in terms of how they move these vehicles into and out of the country.

He said the authorities are now scrutinising and double and triple checking all the documentation to be comfortable and ensure the vehicles are in fact destined for neighbouring countries.

Mabasa said the Department of Home Affairs has also established the Border Control Agency.

“We believe this is also going to assist us a lot from a law enforcement point of view to pick up these particular vehicles and to see how best we can manage the issue,” he said.

Mabasa added that the government is talking to all South Africa’s neighbouring states through the Southern African Development Community to escalate and assist with this problem.

This article first appeared on Moneyweb and was republished with permission.

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