Illegal car imports are a massive problem that is costing South Africa approximately R8 billion per year.
Known as “grey imports” within the auto industry, these illegal vehicles undermine local car sales and job creation, and pose a huge danger to the safety of all road users.
Carmakers and other stakeholders in South Africa are calling on the government to take decisive steps to eradicate the issue through a combination of stricter enforcement and better vehicle authentication.
Better enforcement
Grey imports refer to used models that are brought into South Africa through unauthorized channels, bypassing the government’s regulations, and avoiding official dealership networks, as per market insights company Vehicle Facts.
These vehicles are attractive to local buyers because they are often sold at a far lower price than their legitimate competitors since they are able to dodge various taxes like import duties and VAT.
However, South Africa’s manufacturers have warned that while these cars may seem attractive to price-conscious consumers, they come with a hidden cost to the economy and public safety, as they do not generate revenue and are often not roadworthy.
Industry stakeholders have therefore called upon the government to take decisive steps to block the inflow of grey vehicles into South Africa.
Vehicle Facts contends that this can be achieved through a combination of stricter law enforcement and improved vehicle authentication systems.
The company notes that South Africa must strengthen its border policies, improve its customs operations, and impose harsher penalties on those caught importing or selling grey vehicles if it wants to stop the bleeding.
There has also been a demand for improved car verification, such as using Microdot Authentication to confirm whether a model is both new and legitimate.
“Once sold, before licensing takes place, vehicles should be verified through Microdot Authentication to confirm the vehicle is legitimate and that it was introduced as a new vehicle,” said Vehicle Facts.
“The vehicles should also be inspected as they could have had previous accident damage and/or be re-built.”
On that note, it is important for motorists to be able to spot a grey import to avoid getting saddled with financial and potentially legal troubles for possessing an unregistered car, as a lot of these models are being peddled by unscrupulous dealers and private sellers.
According to IntegriSure insurance brokers, these are the best ways to check if a vehicle is an illegal import:
- Uncommon models – Be cautious if the vehicle model is not commonly found in South Africa
- 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
Only buy from reputable dealers, and perform a background check on private sellers before agreeing to a sale.
Drivers found to be in possession of an illegal car can be subject to fines while the model is impounded, and individuals can be criminally charged in extreme cases.
Insurance providers will not cover grey imports in South Africa, and getting into an accident with an illegal vehicle can lead to jail time if you were aware of the car’s nature.
Grey import headache
One of the most significant impacts is a loss of revenue for the national government, as it is estimated that roughly R8 billion was lost in 2022 in the form of unpaid taxes for imported cars.
Adding to this is the fact that circumventing the legal auto sector stifles economic growth, which deters original equipment manufacturers (OEMs) from investing in new infrastructure and technology in South Africa.
It also creates unfair competition for OEMs, which spend a great deal of time and resources on market research and development to try to produce models at a fair and competitive rate, only for smuggled cars to undercut them by a significant amount.
This leads to a lack of job creation and job security, not just for carmakers but also for individuals employed at various points in the supply chain in dealerships and parts stores.
On the consumer side of the equation, grey imports also present a safety hazard as they are not held up to regulatory standards for roadworthiness.
Illegal cars brought into the country have often been discovered to be missing vital features such as anti-lock brakes or airbags, and many are not well-maintained to begin with.
These shortcomings are dangerous not just for the driver, but for all other road users as items like faulty brakes can result in terrible accidents.
It’s also worth noting that, while a grey vehicle’s price tag may seem appealing, they do not come with warranties, spare parts, or after-sale support of any kind.
Couple this with the fact that many are in a poor condition to begin with, and you will likely be paying far more than you initially thought not long into your new wheels’ lifespan.
The lack of paperwork for these models also makes them a popular tool for the nation’s criminals since they can’t be traced.
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