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Matthew Vella
Georg Sapiano, the lawyer representing the Association of Car Importers, is still hoping to see the back of the Japanese used-car industry in Malta. It represents the other side of the coin for the island’s car-mad population, suffocated under the exhaust of 268,276 vehicles.
Today the used car industry is breathing down the neck of brand new car importers, cutting into their market share at almost 50 per cent. Since 1999, new car imports have taken a drastic plummet – down from 10,225 cars imported in 1999 to 4,932 up until September in 2003. As imported used cars doubled, it looked like the ACIM was facing severe competition from the members of the Used Vehicle Importers Association, its rival lobby spearheaded by lawyer Emanuel Mallia.
The Toyota Vitz remains the darling of the Maltese used-car sector: in 2003 alone, over 3,000 were imported from countries such as Japan, so popular that it notched up 76 per cent of the entire used car trade.
Now the ailing ACIM claims 1,000 jobs are on the line, and wants the government to fully transpose the EU’s End of Life directive, which dictates the minimum levels of lead and mercury in cars on the road, to finally cut the used car industry’s umbilical chord.
But consumers question the ACIM, accusing the lobby of protectionism as it fails to counter the popularity of the cheaper Japanese second-hand imports, easily acquired by internet or even from a kerbside dealer.
“If we want to see the country end up with an automobile population where 95 per cent of cars are second hand, my clients will happily start importing used Japanese cars because that would mean lower costs for them,” Sapiano says about the ACIM, whose members have to take on added infrastructural and labour costs to be licensed importers for car manufacturers.
So what do the ACIM want? Sapiano says free-market competition on a level playing field.
“With EU membership, anyone today can start importing a Fiat. However, importing a Fiat means having a showroom according to certain specifications, qualified staff to offer technical assistance, and a proper after-sales service. These are criteria established by the car manufacturers themselves. Used car importers have none of these costs, but they can start importing Fiats if they wish – at 50 per cent of the market share they certainly have the economic potential to do so.”
But although the used cars are cheaper, Sapiano is quick to pull the stops: “A five-year old second-hand Toyota Vitz is just Lm600 less than a brand new Hyundai Getz. Consumers take the Vitz because it comes with an airconditioner and double airbag. But do they know whether it is a stolen car, how old it really is, its true mileage, whether it was in a car accident or not? ACIM importers operate in a context where quality has to remain high. This is why their costs are high and the UVIA’s are not.”
Sapiano says Maltese importers do not even need to produce the Japanese deregistration certificate that indicates the real mileage of the car when it leaves the country. In New Zealand, the Japan Export Vehicle Inspection Centre issues an ‘odometer certification of authenticity’, which verifies the real mileage of a car. The Malta Transport Authority demands that used cars are covered by the SVA before they leave Japan, a certification based on the standards of the British Vehicle Certification Agency.
Sapiano is sceptical – he calls the SVA the equivalent of an English ‘O’ level from the Tokyo Polytechnic when compared to the EU’s Certificate of Conformity – predictably, the University of London version.
But Sapiano is flagging the environmental banner: with half of Malta’s car population over ten years of age, and another 32 per cent aged between five and ten years, he says there is no reason for Government to allow the importation of used cars when you can have free competition on new and clean technology, since anyone can import brand new cars.
In fact, before ACIM won over the favour of former Finance Minister John Dalli, used car importers were being aided by fiscal incentives in the form of a lower registration tax, paying up to Lm900 less.
In 2003 Dalli gave used car importers the polluter-pays treatment, increasing registration for engines between 1300cc to 1500cc by Lm600. No surprises, it was the 1500cc Toyota Vitz that took the blow. Dalli said Malta should not become a dumping ground for second-hand cars. But despite the short-term fix, used car importers instead started importing more engines below the 1300cc mark. Beneath the surface, the industry remained untouched.
Sapiano wants to see consumers incentivised to buy a new car and dump their old ones. “If it’s a question of income, government knows that to protect the environment it cannot permit the importation of old cars, it has to lower registration tax.
“If the Hyundai Getz is Lm600 more than a five-year old Toyota Vitz, the government should offer a lower registration tax on the car, equivalent to that Lm600. Cars on the road should have their road tax progressively increased every year. In that manner, government recoups the registration tax it forgoes through the incentive, but it also makes it difficult for old cars to remain on the road, because they become more expensive.”
It is in fact the reason why Japanese cars end up on Maltese roads in the first place. Japan’s VRT makes it too expensive for cars to be kept on the road after four years, and they are sold to the UK, Cyprus and Malta, the last bastions of the right-hand drive kingdom.
matthew@newsworksltd.com
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