The process of acquiring a car
Posted Thursday, February 21 2013 at 15:18
Ever wondered how the process of owning a car is structured? Well, there are many ways of acquiring a car be it used or brand new. We look at how the car can get to you.
How does the car get to you, the local buyer? Nshemy Puddy Butamanya, the human resource manager of Chatha Investment, dealers in both used and new cars says, each dealer has agents who go to car auctions in whichever country they import from. Here, the cars are graded from one to five but most people buy grades three to four.
Butamanya says the quality of the car is determined by inspectors in the exporting country after which an importer’s log book also known as an inspection certificate is issued to the agent. After the auction and inspection clearance, the car is loaded onto the ship where it takes one to three months before getting to Mombasa.
However, not every dealer buys cars from auctions. Gilbert Wavamunno, the sales director, Spear Motors Ltd-dealers in new cars, says: “Once we get a confirmed order or deposit from a customer, we place the order using the manufacturer’s specialised online systems which differ between Mercedes-Benz and Chrysler, Jeep and Dodge.”
On the ship
On the ship, one pays for freight (cost on board). Here, the clearing agents issue a bill of lading (a document showing the receipt of goods on board). From Mombasa, the cars are transported to the border. Here, the vehicles are loaded onto a carrier en route to Malaba. However, dealers who consider the carrier expensive, opt to hire drivers to drive the car up to the Malaba border point and then to the depot or bond in Kampala.
After the vehicles have been cleared at the Malaba border point, they are then driven or transported on a carrier to the bond where they are displayed for sale. From the border, depending on the clearing process, it takes a car 24 hours to get to the bond. Uganda Revenue Authority (URA) starts monitoring the car when it gets to the border and at that point, the buyer does not have full authority over it until they clear all the taxes.
Butamanya says: “If an individual drives the car home without clearing taxes, they get arrested by URA. It is only after clearing taxes at the bond point that a buyer can take the car home.” She says because the taxes are high, bond owners do not pay taxes until the cars have been bought. The cost of taxes depends on the type of car.
Richard Kamajugo, the URA commissioner for international trade says, non-commercial cars like saloon vehicles, and four wheel drive cars attract 25 per cent tax, buses and small trucks 10 per cent, while big trucks and tractors are duty free because they are used for agricultural activities.
Also, number plates are fixed after the car has been sold because some buyers think the number plate determines how recent a car is. And it is at this point that registration takes place. Whether new or used, the procedure is the same. Registration which also happens after the car has been bought involves the clearing agent logging in the entry and telling the bond company the cost. At this point, the bond owner surrenders the importation logbook and is given a local one by URA.
It is mandatory for all cars to have a minimum of third party insurance. Usually, the importer signs up for third party insurance that lasts a year but if the buyer wants to sign up for the insurance policy on their own, then the seller lets them do so. This package covers the driver, passenger and pedestrian.
Transaction between the importer of the car and the local buyer should have a written agreement and later a log book after official transfer has been made. Before the dealer hands over the car to the customer, he ensures that it is in good condition. Pre-delivery inspection and test driving is done to check this.
An individual can order for a car directly from the manufacturer. If an individual ordered for a car directly, they would be able to get a car of their choice because they will have the liberty to tell the manufacturer the exact car that fits their taste.
However, both Butamanya and Wavamunno advise against this. Wavamunno says, “It is better for buyers to always go through an official dealership because then you have the peace of mind of getting a manufacturer’s warranty on any new car you buy.”
This means the manufacturer will cover you for any vehicle failure that is not caused by the buyer. He adds that, “You will be buying a vehicle that has been built to suit the local conditions (fuel and bad roads). You save a lot of money on maintenance as the vehicle was built for the local conditions right from the factory.”
When you order for a car through a company, safety is guaranteed because companies usually have comprehensive insurance and they also pay the Kenyan government for tracking system services. This ensures that cars are tracked from the time they leave Mombasa to when they get to the bond in Kampala. So in case of robbery along the way, they can easily be traced.
For those who buy online, all one has to do is log onto a site, look at the cars on sale, then order. However, here, a buyer risks being duped.
Butamanya says: “When it gets to you in a bad condition, you cannot take it back and yet if you buy from a company with a physical address, you could take it back when you realise there are things which are not right after you have bought it.”
She adds that an online purchase takes 45-60 days yet a purchase from a bond with a physical address takes about seven days. Also, the online company only covers costs up to Mombasa so the safety of the car after that step is not guaranteed.
Wavamunno says: “I would not recommend buying cars online as you are going to get cars that were not built for our region. This means they might not be able to work properly with the fuel quality we have available or the road conditions, leading to expensive or continuous repairs.”
Additionally, some brands do not have any official service support in Uganda. “If you still decide to buy the car online, then you should have someone you know on the other side to physically inspect the car you are buying otherwise you are at the mercy of the seller’s honesty,” Wavamunno suggests.
However, for those who insist on buying cars online, Butamanya advises that you research about the online company to verify if it is genuine. Sarah Namirembe, a former online car buyer says; to avoid being duped, get online company references from friends who have experience in online car purchase before making an order. She adds: “One can tell a fraud site by the too good to be true deals they offer for instance, a car that normally goes for $3,000 being offered at $1,000.”