South Africa’s grey vehicle problem

Grey vehicle imports remain a severe risk to South Africa’s automotive industry, economy and public safety.

Grey vehicle imports refer to used vehicles brought into South Africa through unauthorised channels, bypassing official dealership networks and the government’s regulatory frameworks.

At the end of 2024, the National Association of Automobile Manufacturers of South Africa (Naamsa) revealed that grey imports cost the revenue service up to R8 billion annually.

This figure has climbed from R3.8 billion in 2020, representing a 110% increase in the space of a few years.

This loss comes from the evasion of import duties, VAT and other taxes, which are typically bypassed when smuggling or importing vehicles illegally.

This shortfall directly affects all South Africans, depriving the government of critical funds that could otherwise be invested in infrastructure, education, and public services.

In addition to the economic and industry costs associated with these illegal ‘grey imports, they also do not meet industry safety standards. 

South Africans who buy these vehicles unsuspectingly could also have their cars confiscated, with the victim losing out on the hard-earned money used to purchase the car. 

DataDot Technology South Africa COO Chad Thomson explained in an interview with CapeTalk that illegally imported vehicles often don’t meet South African specifications.

For example, their engines and other components, like suspension, are materially different from those of vehicles certified to be driven in the country.

“Customers could be in for a nasty surprise when they try registering a grey import in South Africa,” said Thomson.  

As with any used car sold within the country, the process includes completing a roadworthiness test through local authorities.

“You would need to do the roadworthy test. This is where it could be picked up because it is an uncommon model you’re trying to register,” he said.

“You would then be caught short because you’ve put your hard-earned cash into a vehicle that is now going to be confiscated.”

Still a threat to South Africa’s economy and motor sector in 2025

A spokesperson from the National Automobile Dealers’ Association (NADA) told BusinessTech that illegal ‘grey’ vehicle imports continue to threaten South Africa’s automotive sector. 

NADA noted that despite regulatory frameworks intended to limit their entry, an estimated 50,000 illegal vehicles are added to the country’s roads each year. 

“Over the past five years alone, half a million vehicles bearing foreign registration plates have been recorded operating locally,” the association said. 

“These figures are particularly alarming given that the official vehicle parc in South Africa totals approximately 13 million vehicles.” 

Vehicle parc refers to all the officially registered vehicles on South Africa’s roads, meaning almost 4% of all cars in South Africa are grey imports. 

However, Naamsa estimates this number to be even higher, with illegally imported second-hand vehicles making up 7.5% of the country’s vehicle parc. 

NADA further explained that illegal vehicle imports have wide-ranging and damaging effects on the local industry.

“They undermine the viability of the formal vehicle retail market, where dealerships comply with stringent quality, safety, and environmental standards,” said NADA.

It added that they negatively affect new vehicle sales, service operations, and parts supply chains, threatening jobs and investment across the automotive value chain.

From a broader economic perspective, the associated reiterated that the South African fiscus loses billions of rand annually due to the evasion of taxes, duties, and licence fees. 

However, a recent estimate suggests that over 220,000 vehicles imported via local ports were never exported to their intended destinations in neighbouring countries. 

This included a further 214,000 vehicles that have not returned to their country of registration more than a year after crossing into South Africa.

Commenting on measures that could be taken to effectively address this challenge, NADA said tighter enforcement is key. 

While robust import regulations restrict second-hand vehicle imports to specific exemptions, such as returning residents, vintage vehicles, or specially modified cars, enforcement remains an issue.

The spokesperson added that NADA believes more stringent and coordinated border control measures are essential. 

“Strengthening oversight at ports of entry, tightening the vehicle registration system, and increasing collaboration between customs, law enforcement, and licensing authorities would significantly curtail the inflow of illegal imports,” they said.  

Ultimately, addressing the illegal import issue is about protecting the local automotive sector and is also a matter of national fiscal interest. 

“By closing loopholes and reinforcing compliance, South Africa could reclaim substantial revenue lost to this illicit activity and enhance road safety in the process,” added NADA.