The flood of used car imports: good news and bad
By Makanday Zambia Centre for Investigative Journalism
In 2012, 66,000 secondhand vehicles were imported into Zambia, mostly from Japan. That averages out at 180 used vehicles coming into the country each and every day. These cars and trucks then add to the estimated total of more than 427,000 vehicles already here – and that figure does not include the thousands of vehicles registered as belonging to government.
In Japan, thousands of used vehicles constantly become available for resale because of a strict and very high tax regime on vehicles in order to guard against air pollution, among other things. Vehicles basically get taxed more as they get older, meaning that it is more economical for motorists in that country to buy new cars than to hang on to vehicles that are over five years old. So it is a captive market for Japan’s vehicle manufacturers.
It also offers Japanese auto sale businesses the opportunity to flog off these thousands of used vehicles to willing buyers in Zambia and elsewhere around the world where taxes make the price of new cars prohibitive for many people. In fact, there are those who believe that Zambia has become a dumping ground for used vehicles from Japan, and certainly, judging by the number of internet advertisements targeting Zambia as a market for used vehicles, that would seem to be the case.
There is good news and bad news in this for Zambia. The good news from the point of view of the average citizen is that vehicles have become more available to people who were previously unable to even think of being able to afford buying a car. This is despite the range of duties and charges, which result in the imported costs of those cars being doubled from their advertised FOB (freight/free on board) prices in Japan.
As Adrian Sitali, a schoolteacher, aged 30, says: “This is like a dream come true. I never thought I would own a car in my life. It was so easy getting one. I was assisted to select a car of my choice on the internet.” And the cars can be delivered straight to the buyer’s doorstep – just like pizza.
Good news from government’s viewpoint might be that, according to Zambia Revenue Authority (ZRA) figures, more than K900 million was collected in taxes raised on imported vehicles. According to Laban Simbeye, senior economist at ZRA, earnings from vehicle imports are an important component in the balance of payments. The income roughly equates to some 5% of the total tax collection.
Mr Simbeye also pointed to spin-off benefits for numerous dealers and agents in the supply chain. Additionally, “the informal sector created by used motor vehicles is evident in spare parts dealers, roadside repair and service centres, car washers, and even accessory hawkers in the streets”.
Then there is the bad news. Lusaka is not a big city by world or African capital city standards, and it was never designed to handle big volumes of modern traffic. The end result is that lanes of slow-moving traffic are seriously choking the city, causing delays, wasting fuel, and losing time and money.
The same is increasingly happening in towns throughout Zambia. The pollution from thousands of bubbling exhaust systems is becoming much more obvious as cars are paused at intersections, throwing their poison into the air, and there is little enforcement of any regulations governing carbon emissions. The very high cost of fuel – possibly one of the highest in the world now that subsidies have been lifted – does not seem to deter the burgeoning of traffic along the nation’s roads.
For many, car ownership is a status symbol despite the fact that it swallows up money on fuel and maintenance. Some of the increased use of cars may be a reaction to the poor and pricey public transport system that forces people into car ownership simply to get themselves safely to work, or school, or church – or home.
However, as pointed out by business and policy consultant Professor Oliver Saasa, there is an aggregated positive impact of secondhand vehicles on the economy by way of improved performance caused by increased mobility. As he puts it: “The availability of secondhand cars has improved productivity because more people can afford these cars.”
On the other hand, the growing influx of secondhand vehicles has been blamed for the increasing incidence of road traffic accidents and there are calls from experts for a limit to be placed on the age of cars imported into Zambia. Five years is the usual age mentioned.
Records from the Road Transport and Safety Agency (RTSA) show that 28,000 road traffic accidents were reported in 2012, an increase of 6,000 over the figure for 2011. In 2012, more than 2,000 people died in road accidents and some 5,000 people were injured, many of them seriously.
There is no direct evidence to link the growing road toll with the importation of secondhand vehicles; there is only an apparent coincidence in the growth patterns of vehicle importation and accidents.
Well documented are the economic losses arising from the costs of treatment, rehabilitation, incident investigation and lost productivity from those injured or disabled, as well as for family members who need to take time off work or school to care for the injured. The World Health Organisation estimates that countries lose between 1-3% of their gross national product (GNP, or the total value of a country’s production by its citizens, both at home and overseas) from road accidents. In Zambia, 1% of 2012’s GNP was K1.1 billion.
RTSA’s assistant research and statistic officer, Emmanuel Kanyenda, says his findings show that most of the secondhand vehicles imported into Zambia are “too old, their history is not known and some of them come with mechanical faults that may lead to accidents”.
However, current regulations for Zambia require that all imported used vehicles from Japan must be subjected to a pre-shipment inspection by an organisation called the Japan Export Vehicle Inspection Centre (JEVIC), to minimise the risk of unsafe or otherwise substandard vehicles from entering Zambia. This adds to the costs, of course. Importers are at liberty to bring vehicles in without such an inspection, but in those cases ZRA take it upon themselves to impose a fine on the importers for not having had an inspection done.
The Zambia Bureau of Standards points out that there are no properly equipped vehicle inspection stations in Zambia – a situation that may, according to some, be a significant reason for the increasing road toll. They say that the issuing of vehicle inspection licences is merely a device for raising revenue since no real testing is done.
All that can happen in Zambia is what the principal examinations officer, Joseph Nkamba, describes as “safety inspections”. As he describes it, these are “sight-only” inspections for safety reasons, hazard lights, hooters etc. Nor is any account made of environmental concerns such as carbon emissions.
He did add, however, that RTSA is installing equipment that soon will make mechanical examinations possible. Another side effect of the importation of used vehicles appears to be declining sales of new vehicles, and this is a matter of concern to franchise holders and their staff.
John Connell, chief executive officer of Toyota Zambia, describes the business situation for his company as tough. “It used to be great. But our sales have declined in the last two years. This is mainly due to the importation of great numbers of secondhand vehicles that are coming into the country.”
Susan Mennell, managing director of CFAO, agents for Nissan vehicles, points out that new cars are more fuel efficient so they are cheaper to run, and they have better technology so they are safer than older vehicles. But they are also a lot more expensive, of course. The cheapest car at CFAO is a little MP 200 pick-up, which costs K111, 000 inclusive of duty and VAT, while a new Nissan Patrol Y62 costs a whopping K803,000.
By contrast, poorer punters can pick up a “banger” from Japan for as little as around K10,000 to K20,000, including import costs. CFAO’s main customers are government, corporates and SMEs.
Mr Connell of Toyota Zambia says he is appalled by the carnage on Zambia’s roads and he is convinced that older vehicles have an impact on the accident rate. Ms Mennell hopes that the authorities will look into certain aspects of secondhand vehicles in order “to improve the safety of not only the drivers of those vehicles but also drivers of other vehicles”.