Why a car may seem cheap online but expensive locally
An uninformed consumer is prey to unscrupulous salesmen. You can avoid being taken advantage of by preparing yourself before starting any transactions. Photo by Roland D.Nasasira
What you need to know:
- Caution: You might assume that it is cheaper to buy a German car from Germany, a Japanese car from Japan, a Korean car from Korea, and so on. However, European and Asian cars are driven everywhere, and it is worth looking at online prices from all over the world, in order to find the best deals on the car itself as well as the cost of importing the vehicle.
Exercise some caution though, tales of conmen in this industry are far too common. Make sure that you are extra careful and always try to figure out why a price difference could be so large in some instances.
Approximately four years ago, Edson Arinaitwe imported his third car, a BMW-5 series. Everything, including viewing by photos, selection and the cost of the car, which he recalls was at $4,500 (about Shs12m), then at a dollar rate of Shs2,700, was done online.
“In the conversation I initiated with the dealer, the cost included buying and shipping costs as well as insurance. We agreed that the car is delivered to Mombasa port from where I was to pick it myself,” Arinaitwe recalls.
“When the car was delivered, after close to two weeks, I paid port tax that was determined by the car mileage, model and condition. After paying taxes to Uganda Revenue Authority, I realised that all the costs had almost doubled,” he adds.
Arinaitwe is one of many motorists who, up to today, was surprised how a car was priced at approximately Shs12m online but after going through the process of getting the car to Kampala, almost Shs20m was spent.
How costs increase
Bilal Saeed, the sales manager at Yuasa Investments Limited, says most times, when a car online has a price tag of say, $4,000 (about Shs14m) at the current dollar rate of Shs3,700, the dealer uses it as an attraction to compel you to find out more information.
When you click on the site, it leads you to another web page with different or similar cars with even better deals.
In most cases, Saeed says, the cost of the car you see does not include other related costs. These include inspection costs in the country of origin, cost of transportation from one district of Japan or Germany or any other country to another, the cost of transportation from one district or city to the port and cost of export permission from the Japanese or German authorities, among others.
“All these costs are hidden. Once you select the car you wish to buy, the seller or dealer will keep asking for money for different costs. It is the reason why when the car reaches Kampala, total costs become high and almost double,” Saeed explains.
Within country of origin
According to Saeed, the cost of transporting the car within its country of origin to the port where it is loaded onto a ship destined for Mombasa or any other port cannot be easily determined. This is because different dealers charge different costs. However, these transportation costs are normally determined by the mode of transport. For example, the car attracts different transportation charges by air, road, either by driving the car or using a car carrier, by train or by water.
“You cannot determine where the car is and how much it will cost you. How fast you want the car delivered to you also determines how much you pay for transportation,” Saeed adds.
Fred Kabogoza, a car dealer in Rubaga, Kampala, who occasionally imports cars agrees with Saeed, observing that sometimes the dealer may not be honest to reveal the actual point where the car you are importing is, all in the name of wanting to charge you highly to make a reasonable profit.
“If you are importing the car from Germany, the dealer may say the car is in Munich yet it is in Stuttgart,” Kabogoza says.
Car source difference
According to Saeed, Japan and other countries where second hand cars that come to Uganda are bought, have a number of ports. There could be a possibility that the car is thousands of miles away from the nearest port where it is to be loaded onto a ship destined for your port of choice.
Sometimes, the car may not be in the best mechanical condition that requires using a car carrier or not meet inspection standards. It may at times be driven from one port to another.
This, therefore, explains why you will buy a car at a local bond or even online from Japan or any other country with a certain covered mileage because they are in most cases driven within the country of origin until it is loaded onto the ship. If you do not want your car to be driven, it means the dealer will charge you the cost of transporting it.
Mechanical condition
In Japan, car inspection also determines the cost of a car. Different countries have different rules and policies when it comes to shipping and transportation of used cars. For example, during inspection, it might be discovered that the car emits unhealthy or unwanted fumes.
It could even be a non-functional headlight, poor quality tyres or a faulty indicator. In the end, the car will not be cleared to move unless it is repaired to the required standards. The seller will call you and inform you (buyer) of any new developments and ask you to pay or send more money for extra expenses.
“Different city or port authorities in countries exporting second hand cars do not allow transportation of cars with mechanical faults until they are serviced or repaired and inspected by authorities before being granted permission for transportation,” Saeed concludes, adding that the Japanese Vehicle Inspection Company (JAVIC) has to issue a certificate of inspection to a particular car before it is shipped or dispatched.
All these processes automatically change the cost of cars regardless of whether you buy online or from a bond.
