How illegally imported used cars cost 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 about 30,000 illegal used car imports (often referred to as “grey imports”) leak into South Africa, coming from countries that import second-hand vehicles such as South Africa's landlocked neighbours Botswana, Lesotho and Eswatini (Swaziland), said KIA South Africa CEO Gary Scott.

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, illegal used car imports evade taxes and duties, leading to revenue loss for the government and unfair competition for local dealerships and manufacturers. Naamsa said illegally imported used cars cost the fiscus between R5bn and R8bn a year in direct taxes.  

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

Consumers looking 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 cars usually 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 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 number plate, identifying illegal used car imports is not straightforward. 

“We don't [have] metadata structured enough to identify these cars,” said AutoTrader CEO George Mienie. “So AutoTrader took it upon itself to build a VIN database with the intention of identifying 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,” said Mabasa, citing Sars, the transport department, SAPS and metro police, among others.  

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

Scott adds: “Many South Africans don’t know 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 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.