Annual used car imports fall

Used motor vehicle imports have in the last three year cumulatively declined, impacting government revenue.

Data obtained from Uganda Revenue Authority, indicates that in the 2019/20 financial year the number of cleared motor vehicles dropped to 39,664 units lower than 43,079 units that had been cleared in the 2018/19 financial year.

However, the 2018/19 units were also lower than the 49.559 units that had been cleared during the 2017/18 financial year.
It is not clear why the numbers have been declining but this partly could be explained by the ban on motor vehicle imports older than 15 years.

In June 2018, Parliament passed a law in which importation of motor vehicles manufactured earlier than 2003 was banned.
However, the sharp reduction, especially in the last half of the 2019/20 financial year, could have been a result of Covid-19 disruptions that saw motor vehicle source markets go into lockdowns.

The data further indicates that the reducing trend has eaten into revenue collection during the period.
For instance, during the 2018/19 financial year a total of Shs568b was realised from the Shs1.3 trillion spent on imported units.
However, in the 2019/20 financial year revenues dropped to Shs506b from the Shs1.1trillion spent on units imported during the period.

Mr Francis Kanakulya the Associated Car Dealers spokesperson, yesterday said the drop might be a result of an increase in pricing due to the upgrade in years of manufacture.
He also noted that car dealers, especially in Japan, have increased prices because of increased competition for newer units.

“Right now we are competing for the same cars with Kenyans. When URA reduced the scope of selection, traders [were forced] to compete for the same cars and this has caused a surge in prices even in Japan,” he said, noting the drop could also have resulted from low demand on the local market due to volatile movements in the price of different units.
However, URA insists that whereas it was important to raise taxes, old motor vehicles had been damaging the environment.

Effect of Covid-19
According to URA data, motor vehicle imports were most volatile in the period running from April to June 2020 when Uganda and much of the world went into lockdowns.

During April, motor vehicle imports drastically dropped to 639 units down from 3,378 in March. Revenues collected dived to Shs9b from Shs43b in March. However, during May cleared units increased to 1,482, fetching some Shs20b in revenue. June was much better as cleared units returned to the annual average. In the period 3,450 units were cleared, fetching revenue of Shs43b.

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