Second-hand car import volumes plummet

SECOND-HAND motor vehicle imports have plunged by about 70 percent over the past five years, a development economic analysts have attributed to a number of factors, chief being increases in customs duty on imported cars.

Finance Minister Patrick Chinamasa, in his 2016 National Budget Statement, on Thursday revealed that the value of motor vehicle imports had gone down sharply over the period 2009 to September 2015.

He attributed the decline to "modest protection on a selected range of motor vehicles" availed by Government.

In 2009, motor vehicles worth $428 million were imported into the country and the figure shot up by more than double to $1 billion in 2010.

The value of motor vehicle imports remained constant around $1 billion in 2011 and 2012 before it fell to $717 million in 2013. In 2014 the figures went further down to $542 million.

The period between January and September this year saw motor vehicles worth $316 million being imported, a drastic decline from 2010 when motor vehicle import values peaked.

"Mr Speaker Sir, in support of the local motor vehicle industry, Government availed modest protection on a selected range of motor vehicles. These include double cabs, buses, passenger and light commercial motor vehicles. Consequently, there has been a decline in importation, particularly of passenger motor vehicles," said Chinamasa.

Economic analyst Mr Trust Chikohora said the decline in motor vehicle import volumes was due to a number of factors, among them increases in customs duty on imported cars and the liquidity crunch biting the country's economy.

He said the decline in motor vehicle import volumes is likely going to affect prices of second hand cars on the local market.

"The issue has to do mainly with increased import duty on cars over the past years, which has obviously discouraged a lot of people from importing cars. The liquidity crunch that we are experiencing is also another factor. A lot of people don't have enough disposable income to be able to buy cars, which has seen less and less cars coming into the country. You also can't ignore the possibility of market saturation affecting demand. Maybe there are enough cars in the country now such that less and less people need to import cars," he said.

Added Mr Chikohora: "The decline does not have any bearing on the local motor vehicle manufacturing industry. This is because of limited brands assembled locally and most of those brands are beyond the reach of many people.

"The car retail industry, that is the car sales and so on, is the one that will be affected. The prices of local second hand cars may go up a little because importation has become more expensive for most people."

A local car dealer, Mr Hlanganani Msimanga, acknowledged declining car sale business over the years, concurring with Mr Chokohora on major causal factors.

"It's mainly to do with the import duty charged at the borders and of course the fact that people no longer have enough disposable income. Business has been going down especially on importation of cars as more and more people are now turning to local second hand cars," he said.

The Finance Minister, in his 2016 National Budget Statement, also announced measures to protect the local motor vehicle manufacturing industry from unfair competition from subsidised imports.

He acknowledged that the local automobile industry had potential to manufacture light commercial vehicles and buses and meet local demand but has, however, been impeded by limited access to working capital and antiquated machinery among other challenges.

Chinamasa proposed to remove selected motor vehicles and buses imported by Government and School Development Associations from the Duty Free Certificate Facility, "in order to facilitate implementation of the Cabinet Circular and also empower the local motor industry".

This takes effect from 1 January 2016. He also proposed to increase duty on imported canopies and drop side panels from 10 percent to 40 percent, with effect from 1 January 2016.