DA seeks to allow importation of cheap used cars

Allowing used vehicle imports into South Africa would destroy vehicle manufacturing in the country and lead to the loss of thousands of jobs, says motor industry body Naamsa.

It was reacting to the DA’s call for exploring a lift on the ban on importing second-hand vehicles, which the party said would lead to the introduction of cheaper cars rather than the maintenance of expensive local production facilities.

The DA made the call, with other planned automotive sector interventions, in a policy document released last week titled “The DA’s plan to unleash enterprise, grow the economy and create jobs 2024”.

It said an age limit could be imposed on imported used cars and, to minimise disruption to the market, duties on second-hand cars could be kept at the same level as those on new vehicles.

The proposal was slammed by Naamsa, which said the only reason South Africa and Morocco, among the 55 countries in Africa, have successful automotive industries is by not allowing used vehicle imports.

It said local car factories are not financially viable if they build new cars much more expensive than the same used model imported from elsewhere.

“Allowing used vehicle imports will destroy vehicle manufacturing in the country, resulting in disinvestment by vehicle manufacturers, which will mean 500 component suppliers that only exist because of the vehicle manufacturers will also close shop,” said Naamsa CEO Mikel Mabasa.

“The automotive industry contributed more than 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 thanks to constructive collaboration between industry and government and the cleverly designed automotive policies since 1995.”

Mabasa said the automotive sector is the largest manufacturing sector and in 2023 21.9% of manufacturing output was derived from vehicle and automotive component manufacturing. There are seven light vehicle manufacturers in the country — BMW, Ford, Isuzu, Mercedes-Benz, Nissan, Toyota and Volkswagen — providing direct employment to more than 33,000 people, with another two on the horizon, with 15 truck and bus manufacturers.

“The used imported vehicles illegally registered by South Africa's neighbouring countries in the Southern African Customs Union (Botswana, Eswatini, Lesotho and Namibia) and then illegally operating on South Africa's roads amount to about 30,000 units a year and take away about R4bn of the fiscus annually due to the loss in import and other taxes and about one month of new vehicle sales,” said Mabasa.

The industry is widely regarded as one of the industrial policy success stories of SA’s democratic era

—  Naamsa CEO Mikel Mabasa

“If this is addressed it would create more new vehicle sales, more employment and more growth of the industry, with its multiplier benefits.”

The importation of used vehicles — so-called grey vehicles — is not allowed, to protect the local motor vehicle manufacturing industry. The only exceptions are those brought in by returning South Africans and immigrants who have permanent residence, classic and collectable cars and inherited vehicles.

Used vehicles may be imported via a South African port with the intention of exporting them to a neighbouring country but loopholes are found. According to the National Automobile Dealers’ Association (Nada), hundreds of thousands of illegally imported vehicles are operating on local roads. It is estimated that about 55,000 illegal imports slip into the country every year — more than the number of new vehicles sold every month.

Most grey imports are sourced from developed markets and brought to Africa where they are sold for attractive prices.

Mabasa said a successful automotive industry distinguishes South Africa from the rest of Africa, which has already became a dumping ground for the world’s unwanted and unsafe vehicles.

“Naamsa and the automotive industry would never agree to or support any attempt to allow used vehicle imports into the country as this would not be in the interest of the industry, the country or greater society,” he said.