SA looking at steering grey vehicle imports to Maputo

A plan to shift imports of grey and used vehicles destined for neighbouring countries to the Maputo terminal is being developed by SA’s automotive industry, government entities and JSE-listed Grindrod. The aim is to prevent these vehicles from illegally remaining in South Africa.

Thato Magasa, vice-president for retailing original equipment manufacturers (OEMs) at automotive business council Naamsa and MD of Mitsubishi Motors South Africa, told an SA Auto Week conference on Wednesday there are still about 55 000 grey vehicle imports coming into South Africa a year.

Magasa said these grey imports are costing the fiscus an estimated R80 billion a year in total.

Speaking later on the sidelines of the conference, Magasa told Moneyweb the number of these vehicles coming into the SA market has been increasing, and admitted the biggest problem facing the automotive industry is the used vehicle terminal in Durban, which “allows these vehicles to seep into the South African market”.

No easy fix?

Magasa said conversations are taking place between Transnet and the Department of Trade, Industry and Competition (dtic) about how to deal with this issue.

“At this point in time, everybody agrees that they are not good for country, not good for the South African consumer and they are not good in terms of safety and security because these vehicles go under cover. So there is a big need to change the landscape in terms of where these vehicles are coming from and how can we keep [them] out of the country.”

Magasa stressed that these grey vehicle imports and used vehicles are not intended for the South African market but for South Africa’s neighbouring countries.

This is because these vehicles have not been through a homologation process in South Africa to ensure they meet the country’s safety and other standards, he said.

“We can’t measure these vehicles. They are not meant for our nation when they are coming into our country and unfortunately it’s something that we need to work on to stop,” he said, adding that the response from government entities and other stakeholders to this problem has been “quite positive”.

Grindrod offers an alternative

Magasa said there was a conversation with Transnet and Grindrod during the last roundtable discussion the automotive industry had in Durban about a month ago about this problem.

Grindrod said it is willing to accept the vehicles into the Maputo terminal and able to perhaps shift the importation of these vehicles from South Africa to protect the domestic automotive industry a bit better, he added.

Attempts to obtain comment from Grindrod were unsuccessful.

Grindrod has a concession to operate certain facilities at the Port of Maputo, including a car terminal that is a competitor to Transnet’s car terminal facilities in Durban and Gqeberha (formerly known as Port Elizabeth).

Magasa said different suggestions are being put forward to deal with the grey vehicle import problem and “we’re seeing an eagerness from some stakeholders to deal with it”.

He conceded that there has not been any progressive implementation to deal with it yet.

Have ports, must support

Magasa said the auto industry believes it is feasible to shift these imports to Maputo but there are still a lot of considerations that have to be taken into account – especially by the dtic about trade agreements with other African countries.

He said South Africa cannot tell countries they are not permitted to import certain goods into the Durban port because there are countries in Africa that are landlocked.

“In terms of world trade agreements, we need to ensure that we have harbours that can support the landlocked countries in terms of trade and the ports,” he said.

“These are technicalities that need to be considered, but overall … I think everybody agrees that we do not want the [grey import] cars in the country and there is a need to protect our market.”

Naamsa CEO Mikel Mabasa said last year the council had escalated SA’s growing illegal vehicle importation problem to the International Organisation of Motor Vehicle Manufacturers (OICA) in an attempt to halt the flow of these vehicles from the countries of origin.

‘Dumping ground’ allure set to grow

Mabasa said Africa has become a dumping ground for second-hand vehicle imports – and this is set to accelerate significantly because many European countries plan to ban internal combustion engine vehicles.

The UK planned to do just that from 2030, replacing them with new energy vehicles (NEVs) but recently shifted this deadline to 2035, the same date a ban on ‘older energy’ vehicles in Europe is set to be implemented.

Read: Proportion of SA households who can afford a vehicle is low, says CMH

Second-hand vehicle imports are prevalent in most African countries, largely because they are cheaper and accessible.

Mabasa told the conference that Finance Minister Enoch Godongwana is expected to make an announcement on a NEV policy for the SA auto industry in the Mid-Term Budget Policy Statement on 1 November.

A Green Paper on the advancement of NEVs in SA was published by dtic Minister Ebrahim Patel in May 2021, with the stated aim for it to be finalised within 90 days. It has still not been finalised.

Read: Auto sector frustrated with government over electric vehicle transition policy

Naamsa immediate past-president and Ford Motor Company Africa president Neale Hill said on Wednesday the industry has continued to have extensive dialogue with the government about the NEV policy and has been encouraged by a recent series of bilateral conversations about the policy between OEMs, the dtic and the minister of finance.

Hill said the industry is hopeful there will be a clear pronouncement on and clarity about the policy later this month.