Illegally imported used vehicles, otherwise known as “grey” imports, are a growing problem in South Africa, costing the country’s fiscus in excess of R8 billion in tax revenue per year.
These cars enter the country through several legal loopholes.
Used cars are not allowed to be imported to South Africa for sale, however, they may be brought in for export to a neighboring country, and it is believed that this policy is heavily exploited.
Once these vehicles land at local ports they are purportedly transported toward the nation’s borders, but on the way they disappear into the country they now call their new home.
Similarly, citizens from neighbouring landlocked regions like Botswana, Lesotho, and eSwatini with more lax legislation often drive their vehicles across the borders into South Africa, and simply don’t leave.
As a result, Naamsa the Automotive Business Council estimates that as much as 7.5% of the 12.5 million passenger vehicles on the country’s roads are here illegally.
In 2020, grey imports cost South Africa approximately R3.8 billion in lost tax revenue, which increased to over R8 billion in 2022, said Naamsa.
Exacerbating the problem is the fact that these vehicles are often used to carry out criminal activities because they are not traceable.
The increasing prevalence of cheap pre-owned autos also creates unfair competition for legitimate vehicle dealers and original equipment manufacturers in South Africa.
“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,” said Naamsa.
Naamsa has approached law enforcement agencies, Transnet, and the South African Revenue Services (SARS) to stem the inflow of grey vehicles, and it has already made inroads towards this goal.
“We’ve already spoken to Transnet, and they’ve agreed that the vehicles imported to neighbouring countries will now move from the Durban port to the Maputo port. So we’re moving them away from South Africa into Mozambique,” said Naamsa.
Red flags
While grey vehicles are not registered on the country’s traffic information system, they have steadily seeped into the pre-owned car market thanks to unregulated private sales and shady dealers.
Lizette Erasmus, Manager of Insurance Expertise at IntegriSure, warns consumers perusing used vehicles to be wary of pulling the trigger before they have full certainty that the car they are interested in is not a grey import.
According to Erasmus, one can follow these steps to identify a grey vehicle:
- Uncommon models – Be cautious if the vehicle model is not commonly found in South Africa
- Research the seller – Purchase only from reputable dealers and perform background checks on private sellers
- Suspiciously low prices – Determine if the price is significantly lower than the market average for similar models
- Microdot verification – Request a microdot certificate or take the vehicle to a microdot fitment centre for verification
- Check Vehicle Identification Number (VIN) – Ensure the VIN matches all documentation and is not tampered with
- Inspect registration papers – Ensure the vehicle has a full service history and all necessary documentation, including import papers and registration certificates
- Look for unusual modifications – Check for unexpected or undocumented modifications, which might indicate attempts to pass off a grey vehicle as legitimate
There are numerous dangers to purchasing a grey vehicle, whether you do so knowingly or unknowingly.
Perhaps the biggest risk is being pulled over by the authorities at a roadblock and officers realise you are in possession of an illegally imported car.
In this scenario, you could not only face hefty fines but also be criminally charged, and there is a high likelihood the car will be impounded.
In the event of an accident, the driver could also face liability issues, and in severe cases jail time, if found guilty of knowingly purchasing and using a grey vehicle.
Furthermore, no insurance company in South Africa will knowingly cover grey vehicles. This leaves owners of grey vehicles without protection in cases of accidents or theft.
“Even if a policy is initially granted, it may be invalidated upon discovery of the vehicle’s status at claim stage,” said Erasmus.
“Without insurance, owners bear the full cost of repairs or loss due to accidents or theft. Additionally, resale value for grey vehicles is significantly lower, leading to financial loss.”
These vehicles also do not come with a manufacturer’s warranty or after-sales support, hence, the cost of any and all maintenance and repairs falls on the owner regardless of the age or mileage of the car.
Spare part availability is highly limited, too, further adding to the costs and difficulties of owning a grey import.
Finally, these vehicles are often old and not up to scratch with modern regulations and safety standards, putting the lives of the occupants as well as other road users at risk.
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