SA car manufacturers planning harsher fight against cheap, illegal imports

Automotive business council Naamsa has escalated South Africa’s growing illegal vehicle importation problem to an international vehicle manufacturers’ organisation in an attempt to halt the flow of these vehicles from the countries of origin.

Naamsa CEO Mikel Mabasa confirmed this week that Africa has become a dumping ground for second-hand vehicle imports and Naamsa has escalated this problem directly to the International Organisation of Motor Vehicle Manufacturers (OICA), of which it is a member.

“There must be a country that is sending these cars to us so we want to address that directly with Japan, Asia, Europe and the US so they stop sending second-hand vehicles to our market,” he said.

He said they are prevalent in most African countries since they are seen as easy replacement vehicles because they are cheaper and accessible.

Situation set to worsen

Mabasa believes the problem will accelerate significantly in the future because a lot of European countries are banning internal combustion engine (ICE) vehicles in their markets.

The UK, for example, plans to prohibit ICE vehicles from 2030 and to replace them with new energy vehicles (NEVs), he said.

“Europe is moving in the same direction, so the question that we all need to ask is where are all these ICE vehicles in the UK going to go to?

“I can bet my last dollar that those vehicles are going to find their way to Africa, which is obviously going to exacerbate our challenges even further,” he said.

Mabasa stressed that Africa must find a way to address this problem as quickly as possible.

“As much as the Europeans are trying to reduce their [carbon] footprint, they might in fact be exporting their problem into Africa because those vehicles are much cheaper and governments on the continent are not taking stringent measures to ensure there are regulations in place to deal with this matter.”

Mabasa said Naamsa would like to see a much more coordinated regional approach by South Africa and all its neighbouring states to this problem because South Africa is currently a “feeder” for these neighbouring countries.

He said it will be “a very big win” if all these countries jointly agreed on measures that will help to curb these imports.

Mabasa confirmed that on the African continent, only South Africa, Kenya, Ghana and Egypt do not support the importation of second-hand vehicles into their markets.

Growing by tens of thousands a year?

Reliable data on the extent of the problem in South Africa is not readily available but Naamsa estimated in 2020 that 300 000 of the 12.7 million vehicles on the country’s roads were illegally imported, with the number growing by 30 000 vehicles a year.

Based on the suite of taxes applicable to new car sales locally, Naamsa estimated these illegal imports were costing the fiscus R3.8 billion a year.

Mabasa told Moneyweb this week he does not have any evidence that these imports have subsided and believes these figures are still largely accurate.

Impoundments, arrests

The Road Traffic Management Corporation (RTMC) reported in March that it and the South African Police Service (SAPS) would be destroying 520 illegal vehicle imports that were fraudulently registered on the National Traffic Information System (NaTIS).

This followed a joint operation conducted in 2017 by the RTMC’s National Anti-Corruption Unit, the SAPS Eastern Cape Anti-Corruption Unit, the Special Investigative Unit, the SAPS Vehicle Safety Storage Unit as well as its Crime Intelligence Unit, and the National Prosecution Authority.

The operation led to the impoundment of the 520 vehicles and the arrest of 17 suspects, including members of SAPS, Department of Transport officials and foreign nationals who were suspected to be kingpins behind the syndicate.

The RTMC said investigations revealed that the seized and destroyed vehicles were all illegally imported, predominantly from Japan.

It said they were prohibited for use in South Africa because they were meant to be in transit for export to other parts of the continent but were sold at a reduced price and illegally registered.

The 2020/21 South African Revenue Service (Sars) annual report, its most recent, said its Criminal and Illicit Economic Activities unit conducted 1 661 customs interventions in the year, resulting in revenue collection of R220.8 million.

It said a further 1 028 detentions were made during this financial year, with cigarettes and illegal second-hand motor vehicles featuring significantly.

Road safety threat

Mabasa stressed that illegal second-hand vehicle imports are not just a burden to the fiscus, through the loss of import duties and the displacement of new cars in the market, but also pose a road safety danger because many of them are unroadworthy, old and dangerous, and the appropriate aftermarket parts are unavailable to repair and service them.

“They are also a challenge to the environment. Many of them emit very, very high levels of toxins into the environment and are banned in their countries of origin because they are already old and [due to] their CO2 emissions,” he said.

Mabasa added that the SAPS has confirmed there have been a number of criminal cases, including robberies, where the perpetrators used these vehicles in crimes.

He urged those African countries which have developed automotive policies with the aim of establishing a domestic automotive industry to ensure they “are not silent on grey imports”.

“We are also calling on those countries to increase their own import duties on second-hand vehicles so they become even more expensive to ordinary citizens in those markets,” he said.

“Without them doing that, we will certainly not be able to address the grey imports as we should be.”

Naamsa is also working directly with the SAPS and, more recently, Transnet to reach an agreement to get access to statistics on the number of second-hand vehicles arriving at South Africa’s ports and a better indication of the extent of the problem.

Mabasa said Transnet has agreed to share that data with Naamsa and the parties are currently finalising all the paperwork for the signing of an agreement.

Once this committee is off the ground, Naamsa will be pushing to bring other agencies onto it, including customs and the Department of Home Affairs, to be able to work across all other agencies to address the problem.

This article originally appeared on Moneyweb and was republished with permission.
Read the original article here.

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