Importation of second-hand vehicles hampers local markets

• Records show an increase from 3,000 units in 2007 to over 8,000 units by 2012. This figure more than doubled to over 17,000 in 2019.

Importation of second-hand vehicles hampers local markets

The latest Transport and Infrastructure report published by Statistics Botswana has revealed that used vehicles continue to be imported into the country. The recently published 2020 report says this is to the detriment of local production and regional integration efforts meant to protect the local and regional players.

It deals with licensing of motor vehicles with respect to those registered for the first time and the renewal of pre-existing ones and has shown that a total of 11,818 motor vehicle first registrations were recorded in the third quarter of 2020. Despite COVID-19 induced restrictions, motor vehicle first registrations in the third quarter of 2020 increased by 123.8 percent from 5,281 registered in the previous quarter.

Out of the total first registrations recorded in the third quarter, 80.1 percent were used vehicles. New and re-built vehicles made up only 19.9 and 0.1 percent of the total respectively. Of all passenger cars which were registered for the first time, 96.2 percent of them were used vehicles. Most of the vehicles registered in the third quarter (69.4 percent) were from Japan, followed by South Africa with 19.9 percent.

Most of the vehicles from Japan were used, accounting for 99.6 percent of vehicles from that country. On the other hand, most of the vehicles from South Africa were new, constituting 78.0 percent of vehicles from Botswana’s neighbour to the south. Botswana origin vehicles accounted for a paltry 5.2 percent of first registrations.

These statistics are a clear sign of the dominance of used passenger vehicles on the country’s roads. Some people have argued that the imported used cars are cheaper, hence the influx from Japan. The cheap cars allow ordinary Batswana to own vehicles since those produced locally are usually out of their reach. Others have further argued that used cars have been a good source of revenue for the government, given the high rate of import and value added taxes imposed on them.

Japanese statistics indicate that there is an exponential increase in cars coming into Botswana. Records show an increase from 3,000 units in 2007 to over 8,000 units by 2012. In 2019, that figure more than doubled to over 17,000. However, these statistics exclude vehicles under the price of $2000. 

An increase in second-hand vehicle imports in Africa, more so in Botswana, could be as a result of the declined export value of used cars due to market saturation. This is coupled with the fact that developed countries usually subsidise sales or increase exports of used vehicles. Such countries include the US, EU, and Japan where there are incentives for people to get rid of old cars.

Japan requires their citizens to get rid of a vehicle that is 3 to 6 years old. After three years, each car is subjected to a roadworthiness test which costs roughly $1000. In the event of failure to pass the test, Japan provides an incentive to export the used vehicle. Recipient markets are Russia, Chile, and the United Arab Emirates, in this order of market size. Durban, South Africa is the fourth largest market. Durban distributes used vehicles to African markets, especially the smaller SACU members like Botswana, Swaziland, Namibia and Lesotho. 

Not only has this put pressure on the country’s infrastructural development but it has also hampered efforts to increase local production as local manufacturers cannot compete with the heavily subsidised vehicle imports. There is therefore a need for increased taxation on used vehicles in support of local producers. More policies to curb the importation of used vehicles should be developed to reduce the negative impacts of the imported used vehicles.

Whilst the Botswana Unified Revenue Services (BURS), under the SACU agreement, prohibits the use and registration of imported second-hand vehicles which are more than five years old, the importation of used cars remains a major impediment for local and regional suppliers.

This article was prepared by Data Collection & Analysis (DCA), a business research firm. Feedback or inquiries can be relayed to 76 740 658 or research@easternman.co.bw.