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Wednesday / 19 June 2024
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The one law that makes South Africa’s car industry a success

The National Association of Automobile Manufacturers (Naamsa) contends that the main reason South Africa’s automotive industry is a success is because the country does not allow the mass import of second-hand vehicles.

This follows a recent statement by the Democratic Alliance which said that the party will explore a lift on the ban on importing pre-owned cars into the country should it come into power.

“This would produce significantly more economic activity through the introduction of cheaper cars than the maintenance of expensive local production facilities,” said the DA.

To minimise disruption to the market, the DA said that an age cap could be introduced on pre-owned autos and import duties will be kept at the same level as those on new vehicles.

In response, Naamsa CEO Mikel Mabasa said that doing away with the current legislation banning used-vehicle imports will have disastrous consequences on the domestic automotive sector.

“Allowing used-vehicle imports will destroy vehicle manufacturing in the country, resulting in de-investment by all the vehicle manufacturers in the country, which in turn will mean that 500 component suppliers that only exist because of the vehicle manufacturers will also close shop,” said Mabasa, as quoted by BusinessDay.

“The automotive industry contributed over 5% to the country’s economy in 2023. The industry is widely regarded as one of the industrial policy success stories of South Africa’s democratic era owing to the constructive collaboration between industry and government and the cleverly designed automotive policies since 1995.”

Used-vehicle imports a massive problem in South Africa

The National Automobile Dealer’s Association (Nada) estimates that illegal vehicle imports cost South Africa’s fiscus billions of rands every year through the non-payment of taxes and annual licence fees.

More than half a million cars with foreign registration plates have been recorded on South Africa’s roads in the last five years by the Vehicle Intelligence Data System – which constitutes around 4% of the nation’s 13-million-strong vehicle parc.

Many of these were brought into South Africa through legal loopholes.

Current legislation allows used cars to be imported with the intention of exporting them to neighbouring nations shortly thereafter, and it is believed that around 220,000 used cars have entered the country through the exploitation of this policy and never left.

A further 214,000 came into South Africa through one of its land borders more than 12 months ago and have not returned to their countries of registration.

It is also calculated that the problem continues unabated with more than 50,000 vehicles joining the illegal vehicle parc each year.

Strong regulations are policing the importation of pre-owned vehicles or used parts, but unfortunately, there is little control over so-called illegal imports that come into the country through a multitude of border posts, said NADA.

Finding ways of tightening up border controls to fight this illegal practice is not only in the interests of the local automotive industry, but also a legitimate way of increasing income for the fiscus, which is in the national interest, concluded the organization.


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