The “immediate threat” to the production of new vehicles in South Africa, as well as the broader African market, is the sale of illegally-imported, second-hand vehicles, said Sharon Modiba, National Association of Automobile Manufacturers of South Africa (Naamsa) Executive: Economic Policy and Data Management
The organisation estimates that of the 11-million vehicle parc in the country, 540,000 cars are here unlawfully.
“From this total, an estimated 214,000 account for overstays, while 220,000 have never crossed South Africa’s borders,” said Modiba in the latest Absa Vehicle and Asset Finance Bulletin.
“By percentage representation of the new vehicle sales, illegally-imported second-hand vehicles would have been the third-performing brand in South Africa.”
These illegally-procured cars cost the domestic fiscus between R5 billion and R8 billion a year in direct taxes and are handicapping the continent from becoming globally competitive in the automotive manufacturing sphere.
“To this extent, the African Continental Free Trade Area [AfCFTA] carries the hopes and aspirations of the continent in so far as fostering local content production development as well as innovation, accelerating investment, and enabling Africa to move beyond the production of fewer than one million vehicles a year and become globally competitive,” said Modiba.
Legal loopholes
Imports of used vehicles are illegal in South Africa, with exceptions for certain immigrants importing their cars, and locals that purchase rare and special models including vintage or race cars overseas.
In both these instances, though, the individual must apply to the government before shipping the unit over.
Another exception is for importing vehicles with the intention of selling them to adjacent markets, and it is believed that this is the pretense that many of these illegal cars are entering the country under, said Kia South Africa CEO Gary Scott at the inaugural South African Auto Week in October 2022.
Hundreds of cars are being kept in warehouses in various ports supposedly awaiting transport to the border, but are being moved around to avoid inspections that check whether the vehicles have been in the country for more than 12 months.
Major safety concerns apply to these cars as grey imports have not undergone the testing that is required upon entry into South Africa in order to be allowed onto the roads. They are not on many of the country’s vehicle records, either, as such, they generally aren’t subject to road systems like e-tolls and this makes them an attractive option for criminals.
Many cars with foreign plates on local roads are not even registered in their supposed home countries, according to the Road Traffic Management Corporation (RTMC).
Additionally, it is estimated that more than 50% of all stolen vehicles never actually cross the border, but are instead fitted with fake foreign plates before being put back on the road.
Anyone who is found in possession of one of these vehicles can be criminally arrested and the car impounded, said the RTMC.
Keyword: The “immediate threat” South Africa’s car industry faces right now