Second hand car sales drop on low incomes, high taxes

Second hand car sales continue to drop amid high taxes and dwindling incomes. PHOTO BY FAISWAIL KASIRYE.

A combination of high taxes, dwindling incomes and market ignorance are frustrating sales of second hand cars, according to dealers. The drop comes at a time when the country is registering an improvement in economic indicators highlighted by a reduction in headline inflation, which has slowed 27 per cent at the end of 2011 to 14.3 per cent as of July 31, 2012.

According to information from Coin - a second hand car bond in Kampala, sales have fallen by about 40 per cent, with records showing that average sales have dropped from 10 to six cars for every month.

“We thought sales would improve in the second half of 2012, however, this has not happened. Sales continue to go down. URA is levying high taxes on second hand cars, which makes the final price much higher than the expected,” Mr Steven Wokulira, a dealer at Coin, told Daily Monitor.

In a separate interview, Mr Daniel Busuulwa, a car dealer on Lumumba Avenue, said: “People are not buying. We have asked to meet URA officials to work out a fair tax rate because this is the only way we can revive our sales.”

Recently, Mr Nelson Tugume, the chairman of Uganda Motor Vehicles Importers Association told this newspaper that car sales were yet to recover from the 2011 economic shock that drained a number of household incomes and savings.

“Cars are not a life necessity so consumers can postpone buying them to cater for basic needs. As long as the economy continues to struggle then car sales will be low.”
Recent reports saying that some second cars from Japan have severe effects of radiation from a 2011 nuclear plant burst will also affect car sales, according to dealers.

Commenting on this, Mr Wokulira said: “Some clients have stated talking about Japanese second hand cars having radioactive elements. They read this from the internet and local media. Even if much of this is not true, it will impact our sales.”

Mr Ryo Tokunaga, the head of economic cooperation at the Japanese Embassy said the Japanese government had put in place guidelines to ensure that cars affected by radioactive emissions are not sold anywhere.

The 2011 floods in Japan led to an explosion of a nuclear plant, emitting radiation rays which affected lives and properties in at least a radius of 50 kilometres with the plant’s rang.

However, Mr Tokunaga said some private car exporters have not been compliant to the guidelines thus putting radiation effected cars on the market.

He added a team from UNBS had been trained on how to detect these radiations affected cars so as to ensure that they dont enter he country. Information from URA shows that between 4,000 to 5,000 vehicles enter the country, with a big percentage coming from Japan.


Effect of radiation

Radiation affected cars. There are reports that radiation affected cars from Japan are on the Ugandan market, a factor that puts the health of many users in danger. This is likely to affect second hand car sales according to dealers.

What comes from Japan. Information from URA shows that between 4,000 to 5,000 vehicles enter the country, with a big percentage coming from Japan.

Preventing entry of affected cars. However, through training officials from the Uganda National Bureau of Standards, the Japanese government is putting measures through which it can prevent the entry of radiation affected cars.