News • October 27 2003

EU the heart of car import feud

Matthew Vella
In 1998, the European Commission imposed its highest ever fine, EUR 102 million, on a private undertaking. Volkswagen, the German car giant, was fined by the Commission for agreements aiming to prevent Volkswagen dealers in Italy from selling vehicles to buyers that were not resident in Italy.
The fine confirmed the prohibition of concerted practices, agreements and association between undertakings which may affect trade between Member States, in this case the EU’s competition laws.
In Malta, 1 May 2004 will also herald radical changes in the car retail sector, with parallel importation eroding the power of exclusive agreements and sole distributorships. Even the importers who park their used Japanese imports by the kerbside will now have a finger in the pie, no longer able to be discriminated against by foreign car manufacturers who operate through their exclusive sole agencies on the island.
For the Association of Car Importers (ACIM), which groups Malta’s car importers, this is bad news. Since 1999, new car imports have been taking a drastic plummet – down 52 percent from 10,225 cars imported in 1999 to 4,932 until September this year.
Now the importers are taking the competition seriously. Used vehicle importers, kerbside retailers linked up to the Internet and who thrive on used Japanese imports, are seeing growing demand for second-hand motors. Since 1999, when 1,344 vehicles were imported, the total volume has more than doubled with 3,548 units imported this year.
Last month, the ACIM, spearheaded by their lawyer-spokesperson Georg Sapiano, claimed UVIA members were being aided by fiscal incentives in the form of a lower registration tax, for importing cars which were environmentally damaging and which no longer had any use in the countries from where they originate, Japan. The ACIM says used vehicle importers were paying up to Lm900 less in tax.
Reacting a week later, Emanuel Mallia, legal counsel and spokesperson for the 28-strong members of the UVIA, accused the ACIM of conducting a campaign against its interests: "This is quite abominable when considering that certain ACIM members were until recently importing used Japanese vehicles for resale to used vehicle retailers. UVIA assures consumers that the standards and specifications of these cars are reflected in the thousands of middle income-earning consumers who are satisfied with their acquisitions."
Speaking to MaltaToday, Mallia said the used vehicle sector was stoking up the competition for ACIM importers. "Used vehicles have been imported into Malta for several years now, and these have been satisfying a market for a certain bracket. When government demanded that used vehicles be certified to ensure EU standards, we accepted to have our cars tested before leaving Japan by the British Vehicle Certification Agency. The VCA satisfies the specifications imposed by the ADT."
Sapiano says the problem is not competition. "The problem is that they do not compete on a level playing field. Anyone with a broad pavement in front of their premises can log on to the Internet, get six cars and put them on the pavement and charge a mark-up. That’s not fair because someone else is dealing with manufacturers who operate in environmentally-sensitive areas."
When all the levies are brought into play, Sapiano says, a new car can be taxed up to twice its value, and is calling for a fiscal deterrent for cars that are not up to standard environmentally: "What I don’t accept is that a five year old car is imported - a car which is inevitably dirtier, produced with five year old technology and so less recyclable - with less tax paid on it."
matthew@maltamag.com