South Africa has a massive problem with illegally imported cars, many of which are “dumped” in our market by first-world countries such as Japan.
These vehicles, which are referred to as “grey imports,” are a massive threat to the local automotive industry as they undermine sales, risk job losses, and are a potential danger to all road users.
First-world car dumping
Chad Thomson, the Chief Operations Officer of DataDot Technology, recently spoke on CapeTalk about grey imports and the problems that they create in South Africa.
He explained that the majority of illegal imports originate from right-hand-drive first-world countries which usually have policies in place discouraging the purchase of second-hand models.
For example, in Japan, the cost of getting a used car back on the road, including reregistration and roadworthiness tests, is very high relative to what it would cost to pick up a brand-new set of wheels, which is meant to encourage citizens to support local manufacturers by buying new vehicles every few years.
As a result, countries like these tend to accumulate a lot of pre-owned vehicles that will not be sold locally, which are then dumped in other markets, including South Africa.
Naturally, this comes at the expense of the local auto sector, as companies are now forced to compete with grey imports retailing for abnormally low prices.
South Africa is home to dozens of carmakers including seven original equipment manufacturers with factories here, which means that these illegal vehicles are threatening investment and job creation.
As a result, automakers and other stakeholders have called upon the national government for stricter regulations to curb the flow of grey imports into South Africa.
This includes stronger border policies and customs operations, and improved vehicle verification systems using techniques like Microdot Authentication to confirm whether a model is here legally.
Why you don’t want a grey import
The temptation of a grey import is that it is much cheaper than a new car, but there are several unscrupulous reasons as to why this is the case.
First is that these models enter the country through unauthorized channels as a way to bypass local regulations and dodge import duties and taxes.
In 2022 alone, it is estimated that illegal car imports cost the national government R8 billion in foregone licensing fees and tax revenue.
Another reason why grey imports are so cheap is that they are either missing or have been stripped of features, including important safety systems like airbags and anti-lock brakes.
Many have not been well maintained and are non-compliant with South African roadworthiness requirements, which makes them incredibly dangerous to all road users – not just the driver.
The upfront savings are also misleading, as these vehicles do not come with any form of after-sale support like warranties or service plans and are unlikely to have an abundance of parts in supply.
Combine this with the fact that many are already in poor condition, and it’s easy to see that you could be paying far more over the long term for its upkeep.
It’s worth noting that a lot of grey imports are not disclosed to the customer, who may be unwittingly purchasing an illegal car that could be confiscated when they try to register it with the authorities, so it’s vital to do your due diligence before purchasing a vehicle that at first glance seems to be a bargain.
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