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A used car dealership in Bulawayo

Brighton Gumbo Business Reporter
CAR dealers say the 10 percent duty increase on imported second hand light motor vehicles the government has effected starting today will worsen the viability of their businesses.

In the 2015 mid-term fiscal policy review announced in July, Finance and Economic Development Minister Patrick Chinamasa increased customs duty on second-hand imported light passenger motor vehicles by 10 percent as part of government efforts to discourage imports.

The Zimbabwe Revenue Authority (Zimra) in June increased import duty on all second-hand motor vehicles.

The move resulted in duty for a wide range of motor vehicles going up by between $200 and $400 while those importing top-of-the-range second-hand models were required to fork out more.

For example, where importers used to spend $6,000, they were now required to pay an additional $400.

Before the introduction of the 10 percent increase, motor vehicles with engines above 1,500cc were being charged 86 percent duty including Value Added Tax and surtax while vehicles of engine capacity below 1,500cc attracted a 40 percent duty.

A snap survey carried by The Chronicle in Bulawayo yesterday revealed that many car dealers have not welcomed the implementation of 10 percent duty increase on second hand light passenger motor vehicles.

Remest Commission Car Sales director Jetrow Moyo said the car sale business has been performing poorly for the past two years as a result of prices which are beyond the reach of ordinary people.

“People can’t afford the current prices of our vehicles and if we’re to peg our prices much higher in response to the increase in import duty, then our business is going to be adversely affected,” said Moyo.

Recently, he said his company tried to offer a three month credit facility to prospective customers but to no avail as the buyers were still failing to pay within the stipulated time frame.

An official who preferred not to be named from Shah Car Sales said their already underperforming business was being further worsened by the 10 percent customs duty increase.

“We’re not happy with the increase but there is nothing we can do. People can’t afford our current prices and with the effecting of the 10 percent duty increase we’re being pushed out of business,” said the official.

“If we’re to increase our prices to match the duty hike, then it means our poorly performing businesses are going to be greatly affected.”

Kendoc Car Sale Bulawayo branch operator Kennedy Rundova said clients cannot afford their current prices as they always prefer to settle for negotiations.

“Customers are not always willing to settle for our prices, they usually settle for negotiations if not cancellation of the sale. So with an increase in duty, it means our businesses are going to be grossly affected as car dealers,” said Rundova.

Since the liberalisation of the economy in February 2009, the local market has seen an influx of imported goods including motor vehicles from Japan and the United Kingdom.