Naamsa has discovered that, as of the 1st of October 2020, 300 000 of the 12,7 million cars on South African roads have been illegally imported. This is a figure that grows at 30 000 vehicles per annum which, according to Naamsa, displaces the new car sales.

Based on takes applied to new car sales in the local market, it is estimated that this costs the fiscus R3,8 billion every year. Grey imports have a negative impact on the local automotive ecosystem because it takes away from possible tax revenue and hurts job creation.

Putting it into perspective, the monthly average for the new vehicle market for 2020 is 28 500 units. Grey imports represent an additional month of sales per annum, which equates to 7.5 per cent of total market and would be the third largest brand in SA by volume.

New vehicle sales statistics for September 2020, Naamsa confirms aggregate domestic sales at 37 403 units continued to improve in line with lower lockdown levels over recent months but still reflected a decline of 11 737 units, or 23,9 per cent from the 49 140 vehicles sold in September last year. Export sales at 28 704 units also registered a fall of 7 566 units or a decline of 20,9 per cent compared to the 36 270 vehicles exported in September 2019.

Overall, out of the total reported industry sales of 37 403 vehicles, an estimated 33 080 units or 88,4 per cent represented dealer sales, 5,0 per cent of sales to government, an estimated 3,7 per cent to the vehicle rental industry and 2,9 per cent to industry corporate fleets.

The September 2020 new passenger car market at 22 798 units had registered a decline of 10 322 cars, a fall of 31,2 per cent, compared to the 33 120 new cars sold in September last year. The car rental industry accounted for a contribution comprising 5,7 per cent of car sales in September 2020.

“The performance for the year to date now reflected a fall of 37,5 per cent compared to the level of the same period last year. The easing of lockdown restrictions to level one during the month contributed to the uptick in business activity and new vehicle demand and drove the further improvement in business conditions in the South African manufacturing sector.” Naamsa said.

“However, business conditions remain far from normal and the new vehicle market is expected to remain under pressure in the current economic scenario. For the year to date the new vehicle market has now contracted by 33,4 per cent or 132 878 units compared to the corresponding period last year.”

“An important avenue for government to support this key coronavirus-hit sector of the economy is to reduce taxes on new vehicle purchases to stimulate new vehicle sales. Combined with record low interest rates and low inflation, the automotive industry and the economy in general could hugely benefit should the tax burden on vehicles be reduced during this time.”

Naamsa also noted that vehicle export numbers “continue to recover to some extent as the automotive industry’s major export destinations are starting to ease their lockdown restrictions. Going forward, South African vehicle exporters will be required to consider various scenarios for the world economy and global trade patterns in the short to medium term.”

Original article from Car