South Africa is losing billions of rands – and it’s not because of load shedding

South Africa’s economy is losing billions of rands in potential income through taxes and levies due to the illegal importation of motor vehicles.

According to the National Automobile Dealer’s Association (NADA), there are hundreds of thousands of illegally imported cars on South Africa’s roads, contributing nothing to the country’s overstretched fiscus through taxes and annual licence fees.

“If these buyers had bought new or used vehicles through official channels instead of illegal imports and paid annual licence fees, the economic benefits would have been huge, considering how long this practice has been going on,” it said.

The National Director of NADA, Gary McCraw, noted half a million cars with foreign registration plates had been recorded on South Africa’s roads in the last five years by the Vehicle Intelligence Data System (VIDS).

This is an alarming statistic considering the official vehicle parc – number of registered and legal cars – in South Africa is made up of about 13 million vehicles. This means that just under 5% of road vehicles in the country are illegal imports.

The VIDS system is primarily used to track vehicles that are stolen or used for criminal activities. It can automatically recognize license plates and identify fakes or duplicates, and sightings are tracked with GPS coordinates, date time-stamp, and an image of the car in question.

Other notable statistics related to the illegal importation of these illegal vehicle imports, as outlined by the National Director of NADA Gary McCraw, are:

• 220,000 vehicles brought in through South African ports have never been exported to the neighbouring countries they were intended for;
• 214,000 entered South Africa across a border more than 12 months ago and have not returned to their country of registration; and
• 50,000 vehicles join South Africa’s illegal vehicle park each year.

McCraw added that these illegal imports are often used or second-hand cars imported from another country through channels other than those of the manufacturer or official distributor.

In South Africa, used vehicles are not allowed to be brought in for sale but may be imported through a port with the intention of exporting the car to a neighbouring country, and it is believed that this policy is being exploited as a loophole, said the NADA.

“There are strong regulations in place regarding the importation of pre-owned vehicles or used parts, but unfortunately, there is little control over so-called illegal imports that come into the country through several border posts,” it said.

The association added that there are supposed to be strict control measures in place to ensure that only a limited number of legal import permits for used cars are issued annually.

These permits are used by immigrants, residents, and nationals returning to South Africa, vehicles specially adapted for those with physical disabilities, cars inherited by South African citizens, and vintage or collector models that cannot be found anywhere else.

“Finding ways of tightening up border controls to fight this illegal practice is not only in the interests of the local automotive industry but also a legitimate way of increasing income for the fiscus and stimulating GDP growth, which is in the national interest,” said McCraw.

Read: South Africa may look to ban new petrol and diesel cars by 2035 – here’s why