South Africa has an enormous problem with illegal vehicles which are entering the country through unofficial means.
Imports of vehicles going through channels other than the manufacturer’s official distribution chain, which is labelled as “grey” or “parallel” imports, have exploded in recent years, and are costing the domestic automotive industry billions of Rands.
The majority of these cars are entering the country on false pretences, as they are supposedly being brought into South Africa to be sold to neighbouring markets like Botswana, Namibia, and Lesotho, but investigations have found that most of these vehicles never end up making it across the border.
In the last five years, cameras on our roads have picked up 540,000 unique vehicles with foreign licence plates, and of these, 440,000 have been in the country for more than 12 months, which is illegal.
Furthermore, 220,000 of these supposedly foreign-bound cars, which all entered South Africa through Durban’s ports, never left the country to begin with.
This is damaging to the auto sector for multiple reasons, the first being that it is affecting legitimate sales to neighbouring countries, which declined from 21,000 units in 2017 to 16,000 units in 2021.
The grey vehicle market in South Africa is currently growing at a rate of 55,000 units a year, which would make it the third-largest automotive brand in the country if it was a legitimate business, and this is costing the industry an estimated R5.8 billion per annum.
These shocking statistics were revealed by Kia South Africa CEO Gary Scott at the inaugural South African Auto Week which took place during the last week of October.
Legal vs Illegal used car imports
Imports of used vehicles are illegal in South Africa, with only a few exceptions.
There are cases where immigrants are permitted to import their cars, and locals are able to purchase special vehicles including vintage or racing models that cannot be found elsewhere, but in all of these cases the individual has to apply to the government before bringing their cars over, and left-hand-drive models are not allowed at all.
Another exception is for importing vehicles with the intention of selling them to adjacent markets, and it is believed that this is the pretence that many of these illegal cars are entering the country under.
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 also not on many of the country’s vehicle records, as such, they often aren’t subject to road systems like e-tolls and this makes them an attractive option for criminals.
Many of the cars in South Africa with foreign plates are often 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.
Another important aspect of the grey market concerns tyres, as South Africa does not allow for the import and sale of used tyres due to safety concerns.
The only exception is for heavy-duty commercial vehicles that accumulate a high mileage in a short period of time, as retreading and reusing tyres is an important cost-saving practice. However, selling used tyres is illegal for all passenger and light-commercial vehicles.
Even so, there has been a massive growth in the importing of used tyres in South Africa in the last two years, which hurts local sales and is also contributing towards accidents because of a lack of safety standards.
As many as 63% of the cars involved in accidents in the country have worn or illegal tyres that are no longer roadworthy and should have been scrapped, said Nduduzo Chala, a managing executive for the SA Tyre Manufacturers Conference (SATMC).