Why banning old cars is still a tricky issue

On May 31, 2018, government banned cars older than 15 years (from September 2018) from entering the country following the enactment of the Traffic and Road Safety (Amendment) Act 2018. According to the parliamentary website, the Act extended the age of cars exempted from environmental levy to eight years from the original five years and the environmental levy tax burden now shifts to older cars. The levy is now 50 per cent of the vehicle’s value.

Member of Parliament Henry Musasizi, the chairperson of the Committee on Finance, Planning and Economic Development, then supported the move, but cautioned Parliament against depriving hundreds of employment.
“The used motor vehicles industry comprises of car importers, forwarders totaling to 11,139 people. The ban on the importation of old vehicles will render 11,000 direct beneficiaries of this unemployed,” he said.

He also called for the reduction of taxes on new cars as an incentive to discourage purchase of older ones.
Leader of the Opposition in Parliament then, Hon  Winfred Kiiza opposed the move saying it will disadvantage poor Ugandans and drive many out of business.
“Let’s not be blinded, let’s not close our eyes and minds to the reality of our lives. Our population cannot afford the first hand vehicles,” said Kiiza.

Impact of old cars on taxman
In line with Section 64 (k) of the East African Customs management regulations, 2010, Uganda Revenue Authority (URA) sent a public notice that effective July1, 2022, motor vehicles of nine years and above from the date of manufacture shall no longer be cleared under the warehousing regime. 

According to URA, the new administrative measure will phase out the previous norm which allowed for warehousing of motor vehicles for a period up to nine months. 

“It is aimed at saving government revenue held by delayed warehousing of such motor vehicles.”
Abel Kagumire, URA’s Commissioner of Customs, revealed that restricting the importation of these vehicles will also avert the recurring risk of such vehicles ‘expiring’ in car bonds before taxes have been cleared. 

“For instance, motor vehicles imported at 14 years from the date of manufacture hit 15 years during the nine months allowable warehousing period and cannot be allowed on the roads since they have not been cleared and taxes have not been retrieved. In March and December 2021, 365 vehicles with a value of Shs4,529,183,401 in taxes expired during the warehousing period.”

Impact on car dealers
However, this ban has had an impact on the car dealership business and Shafique Mutebe of Black Power auto centre shares grievances:

Unfriendly tax regime
Mutebe says Uganda’s tax system makes owning a newer car almost impossible for the bigger part of the population. 

“While they may want someone to buy a 2010 model, one may not have that money. Even if they do, the tax regime for cars is out of range. For example, if a car costs $20,000, the taxman will ask for almost the same in cost, freight and insurance. That has scared many people from adjusting to the newer cars,” he says.

Double standards
While the main agenda for the ban is to control emissions, Mutebe says it was a very wrong decision that the East African Community (EAC) decided to take. 

“Much as they are looking at protecting the environment in regards to emissions, Uganda has not got to an alarming level. Many of the banned cars here are still being driven in their countries of origin. For example, the Audi 2003 A4 is still in use in Germany, and Poland where the emission regulations are tighter compared to what we have in Uganda,” he says. 

Varying economies
While the same law was passed in Kenya and is seemingly thriving, Mutebe says the EAC representatives who engineered this did not scrutinise the conditions of the people in the member countries.

“The financial muscle of Ugandans cannot be compared to that of Kenyans seeing that our economy is lower than theirs so we cannot do things at their pace. Even if one wanted to buy a Lexus hybrid, they may opt for a Harrier to save. Others will go to second-hand bonds to get a car within their means,” he says.

Impact on sales
With very many in this industry, the struggle is to ensure that they remain in business but the decline in sales is huge.

“There are so many cars that were removed from the production line yet Ugandans have not got a chance to drive owing to this policy. However, while car dealers may bring in the required cars, not many Ugandans can afford them,” he says. 

For those that insist on buying older cars to suit their pocket, Mutebe says some have opted to register it in a foreign land, such as South Sudan then cross with it into Uganda. 

“However, there are several charges to that such as registering a car with foreign number plate, paying road user licence for say a year or two. Thereafter, they will take it back for de-registration which calls for inspection and comes at a cost,” he says. 

Pros of older cars
Compared to the first generation cars, the current cars cannot keep up because the latter was durable hence lasting for years. For example the first generation Rav4s are still on our roads because their owners appreciate the value they offer compared to what is coming out of the factories lately. As long as they can keep them on the road, they are comfortable driving that older car because it is loyal in every sense.

Raul Kanyike, a car dealer says while there is a push to embrace newer cars, they are made out of soft metal such as aluminium making the body very weak, which makes them weak on the road. 

“Their engines, more so those brought to Africa, are quite small because manufacturers have learned that our market wants cars that do not need much to fill the fuel tank. These cannot last more than 10 years because their quality is wanting,” he says.

 On the contrary, older cars were manufactured using stronger metal. 
Maintaining these weak cars is also cumbersome because looking at the status of our road, Kanyike says they will not last long owing to several breakdowns. 
“The cost of maintenance gets higher because the car make-up cannot handle the rough terrain Ugandan roads present. That is unlike the older cars, such as those that are no longer being manufactured such as the Rav4 which were hard cars,” he says. 

Maintenance also includes spare part replacement and Kanyike says those coming in are weaker than what came to the market previously. 
“The spare parts previously were of superior quality than is on the market currently. The diminishing quality is aggravated by the increasing counterfeits, a combination that makes car maintenance even trickier,” he says.  

Additionally, Ugandans are not into servicing and maintaining their cars routinely. 

“Therefore, they will opt for the cheap spare parts to spend less, or do maintenance just when a problem arises. All these feed into an already weak car hence compromised longevity,” Kanyike says.

Pros of newer cars
However, we cannot negate the fact that being light means less fuel burnt. That is unlike the older cars that burnt more fuel. 
“That is also credited to the fact that some are semi hybrid or hybrid hence inbuilt with mechanics to ensure less fuel consumption. That also gives one a smoother ride,” he says. 

That is not forgetting that these are more comfortable with several amenities such as receiving calls via Bluetooth. 

“Manufacturers are reading into the needs of the current generation hence giving the customer what they want. That way, one is in control of the car without doing much,” Kanyike says.

Dicey position
Unfortunately, the spare parts of these older cars are no longer readily available thus harder to get. Therefore, some people order for them from abroad because there are some countries that still allow for the importation of these.  

“That said, the cost implication is higher than for those that are readily available,” he says.
However, if one is bent on keeping their older car, even locally, there are some old car dealers that will get some of these parts by buying cars involved in accidents hence written off.
 
“Chances are, despite being involved in a nasty accident, some parts can be salvaged and later sold to those in need of spare parts,” he presents an alternative. 

The newer cars are highly computerised and while it reads into the needs of the younger generation, Kanyike shares that the older generation mechanics have not bothered to upgrade their skills to embrace the newer cars. 

“Many of these claim that these cars have ‘a lot of electricity’ hence not good to hide their inefficiency. As such, the old mechanic is getting phased out. On the brighter side, there are garages opening up today with all the tools needed for problem diagnosis for these newer cars,” he shares.

The challenge is the cost of doing repairs has increased. For instance, plugging the car to a diagnostic machine may cost you no less than Shs100,000 and the cost increases with the complexity of the car and the garage’s status. 

“This is crucial before any repairs are done to avoid guesswork. However, previously, this was the cost of the mechanic’s labour. On the flip side, if you insist on going with your manual mechanic, chances are, an error will be made which will mess up the mechanics within, denting its functionality for life as many components are interconnected,” Kanyike says.

With conversations around doing away with older cars, Mutebe says the age of the car may not necessarily mean it is not road worthy. 
“The government put a spotlight on emissions without paying attention to other factors such as poor car maintenance. Additionally, why would they stop the importation of personal cars older than 15 years yet allow a truck as old at 1994? It baffles me,” he says.

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