No need to ban car imports

Calls for Government to ban the importation of cheap imports are misplaced. While we certainly need to promote the local motor industry there are number of ways that we can do this without creating a situation where we are potentially held to ransom by local companies that promise much but could possibly deliver little.
Government needs to establish how cheaply local companies can produce and then impose an import duty regime that ensures that the cheapest second-hand import costs just marginally less than a locally manufactured vehicle. Willovale Mazda (WMMI) has claimed that it can produce the Mazda 3 for US$10 000 if the conditions are right. At surface these numbers look suspiciously optimistic.

A number of issues arise. The first is how quickly WMMI can actually start delivering vehicles at that price and in quantities that can satisfy local demand.

It would be quite sneaky to impose punitive taxes before the vehicles are actually available for sale, which would expose the exercise as more a ploy to raise revenue than a sincere effort to support local industry.

While conversation revolves around WMMI, the objective should be to create a conducive environment for any player.
It has been pointed out that securing investment is a problem. It actually is not. The money is available but there is no robust model that any financier would be willing to put their money behind. It is important that we have a holistic approach that is demonstrably sustainable.

Take insurance, for instance. Financial institutions would be hesitant to finance the purchase of a vehicle for a person without security since they could very easily crash.

A possibility would be for the financial institutions to take up insurance for this sort of risk or to force buyers to purchase comprehensive insurance and accompany this with rigorous police enforcement.

The latter seems preferable and would go some way in generating jobs in the insurance industry.
In the event of default it would be hoped that a healthy second-hand car market could absorb such vehicles. This is dependent on the condition of the vehicle. This raises the issue of vehicle maintenance and enforcement of road-worthiness tests.

In the current environment, a buyer could quickly run down a new vehicles. Can we introduce a robust system demanding vehicles are serviced and meet certain conditions to be considered roadworthy? Other countries have routine tests that vehicles must pass.

What of ethanol? How does the current conversation marry with our ambitions insofar as energy independence is concerned?
Two-thirds of Brazil’s cars can run completely on ethanol. Should we be looking at retooling plants like WMMI that assemble diesel and petrol vehicles or should we be discussing ways of assembling vehicles that run completely on ethanol? It would seem congruent to pursue the latter.

The Government remains the biggest buyer of brand new vehicles. Can we really have a sincere conversation about our motor industry without Government coming up with a framework in which all its vehicles are purchased locally and hopefully run completely on locally produced ethanol?

It is doubtful the population will take such initiatives seriously if Government does not demonstrate its own commitment.
In 2012 about 350 parliamentarians received US$30 000 each to import new vehicles while at least US$9 million was splashed on importing Government ministers’ vehicles.

Other Government agencies made purchases in the millions of dollars. A simple guarantee for an exclusive Government contract and punitive taxes could very well attract investment.

In addition, reforms are necessary on Government disposal of vehicles. The current situation where a vehicle is devalued to US$1 500 while selling for US$17 000 on the market is unacceptable and amounts to cheating the taxpayer.

Civil servants are purchasing vehicles for a song. Government could release these vehicles into the market and feed into a healthy second-hand market.

The issues relating to the revival of the motor industry are broad and complex and cannot be hurried. There is a need of a congruency in policy.

It cannot be the case that we spend millions supporting diesel and petrol guzzlers while preaching the benefits of ethanol.
In the same way, we cannot imagine reviving the motor industry without creating a conducive environment that encourages financial institutions to support buyers.

At the core of this issue is political will on the part of Government. It will send a very clear message and establish moral authority if senior officials are the first to adopt locally assembled vehicles.

 

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