Illegal used car imports: Costing the country and consumer dearly

For years, Africa has been the dumping ground for inferior used cars from abroad.

South Africa outlaws the importation of used vehicles. But each year around 30,000 illegal used car imports (often referred to as ‘grey imports’) leak into South Africa, coming from countries that import second-hand vehicles like SA’s landlocked neighbours Botswana, Lesotho and Eswatini (Swaziland), revealed Gary Scott: CEO of KIA South Africa. He was speaking at the AutoTrader Dealer Convention in April, where key industry players discussed illegal used car imports and their impact on South Africa.

By circumventing official channels, these illegal used car imports evade taxes and duties, leading to revenue loss for the government and unfair competition for local dealerships and manufacturers. naamsa | The Automotive Business Council says that illegally imported used cars cost the fiscus between R5 billion and R8 billion a year in direct taxes.

There’s more to the illegal import saga. The influx of illegal used car imports negatively impacts local car market sales, undermines local manufacturing, technological innovation and job creation, and aids criminal activity.

Consumers, solving for affordability, probably care little about revenue loss. But the risk of personal loss is just as real.

Price is the illegal import’s lure as these illegally imported used cars generally come with a lower price than legally sold vehicles. But there’s a price to pay for buying cheap.

“Illegal used car imports are often very old and may not meet local regulations and safety standards, potentially endangering motorists and other road users”, said naamsa CEO, Mikel Mabasa. Buyers also face challenges in obtaining warranties, spare parts and after-sales service. “And they run the risk of the car being impounded and destroyed”, added Scott.

Unless displaying a foreign plate, identifying illegal used car imports is not straightforward.

“We don't sit on metadata that is structured enough to identify these cars,” explained George Mienie, CEO of AutoTrader. “So AutoTrader took it upon itself to build a VIN database with the intention of identifying these illegal imports. At a minimum, this ensures transparency for the consumer.”

Stemming the flow of illegal used car imports is no easy task. “Multiple stakeholders need to come to the party to resolve the issue,” stated Mabasa citing SARS, Department of Transport, SAPS and Metro Police among them.

Some progress has been made. “We've already spoken to Transnet and they've agreed that those vehicles [being imported to neighbouring countries] will now move from the Durban port to the Maputo port. So we're actually moving them away from South Africa into Mozambique.”

Scott goes on to add “Many South Africans don’t know that used vehicles may only be imported under specific exemptions and only after a successful application to the authorities. Foreign-plated cars can only be driven by their foreign owners themselves, during the visit period”.

Buyers beware. When something seems too good to be true, it usually is. Your bargain buy could turn into an expensive mistake.