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Matthew Vella
The increase in registration fees for Japanese used vehicle imports, announced in 2003 under the guise of a ‘polluter-pays’ measure has officially failed. Used car imports have practically doubled in one year, with total Japanese imports increasing by 86 per cent – a massive increase of 3,000 ageing vehicles from the land of the rising sun.
Official statistics have pointed towards a thriving used car importation business despite the increase in registration fees, showing a healthy consumer demand for cheaper Japanese cars which have passed their end-of-life threshold back home.
It was months before the November 2003 budget that the Association of Car Importers (ACIM), spearheaded by lawyer Georg Sapiano, started calling on government to notch up the registration fees for Japanese imports, claiming the ageing vehicles were being dumped on the island to the detriment of the environment.
Irrespectively of the irony of having the industry responsible for 20 per cent of CO2 emissions make an environmental argument, the government followed suit when it acquiesced to the ACIM’s concerns.
“It is evident that a used vehicle cannot reach the same level of environmental standards as a new vehicle... we would not wish Malta got a name for dumping of second-hand cars discarded in other countries,” Dalli had said in parliament during the budget presentation.
The hike was however discriminatory. The highest upturn was rightfully accorded to the most polluting vehicles – those exceeding a 3000cc in engine capacity were increased from Lm10,000 to Lm11,000 in registration.
The second highest increase however was not the 2500-2000cc engine. It was in fact those vehicles forming the main corpus of the used car business, the 1300-1500cc engines: favourites like the Toyota Tercell and Corolla, and the Honda Civic all incurred an increase of Lm600 in tax.
No surprises, it also hit the darling of the Maltese used car sector – the Toyota Vitz – so popular that in 2003 alone, over 3,000 were imported from countries such as Japan, taking up 76 per cent of the entire used car trade.
Two worlds
Despite the short-term fix, the industry appears to have remained untouched. Today, the ACIM believes the increased consumer demand for Japanese imports is putting close to 1,000 jobs on the line – the used car industry is now breathing down the neck of brand new car importers, with an even share of the car retail pie.
With an island suffocating under the exhaust of 268,876 vehicles – some 670 per 1,000 inhabitants – Malta is within the top five most dense car populations in the world.
Since 1999, used car imports have been steadily eating into the market of local agents to the car manufacturing giants. New imports have taken a drastic plummet, down from 10,225 to below 5,000 in 2003 according to statistics issued by the House of Representatives.
Used cars on the other hand have increased exponentially, by almost 400 per cent within the space of just five years. They have become favourites because for Lm600 less than their nearest brand new equivalent, a five-year old Vitz will come with an air-conditioner and double airbag, and other extras.
The retail car sector is however divided into two worlds. Used car importers do not bear the same costs as agents of car manufacturers, which make it mandatory for their agents to have specifically built showrooms, technical staff and a proper after-sales service.
Used car retailers on the other hand ply their trade off kerbsides and internet websites, with some opting for a showroom.
The two sides also have different environmental obligations. Japanese imports have to be tested before they arrive in Malta, and be covered by the Single Vehicle Approval test (SVA), a compliance certificate based on the British Vehicle Certification Agency’s criteria.
Compared to the EU certificate of conformity (COC) issued for all manufactured cars, the ACIM is sceptical of the obligations the law demands of used car importers – in the words of Georg Sapiano, the SVA is the equivalent of an English ‘O’ level from Tokyo Polytechnic, with the COC being, predictably, the University of London version.
Additionally, the ACIM claims there is no guarantee of whether a used car was ever stolen in the past, how old it really is, or what its real mileage is. In New Zealand, all Japanese imports have to be accompanied by a Japanese deregistration certificate that clocks a car’s mileage before export. Once arrived in the country, inspectors verify that mileage has remained unchanged.
Radical change
Of course the environmental arguments of the ACIM lack a sound justification – all it wants is to be able to sell diesel and petrol engines itself rather than having others plying the profitable second-hand trade. But the glaring difference in costs clearly undercutting the overburdened car retail sector, the ACIM has demanded a level playing field in competition. Critics have accused the ACIM of protectionism because it has failed to counter the consumer demand for the cheaper Japanese imports. But the ACIM says the EU allows parallel trading – its rivals are free to compete on the same ground as they operate, by importing the same cars they do under their same conditions.
The ACIM 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.
In fact, it is the government which has so far failed to tackle the island’s increased dependence on motor vehicles. At least half of Malta’s car population is over ten years of age, another 32 per cent is aged five and over – high registration fees on new cars do not serve as an incentive for consumers to buy a new car and dump their old ones, because of the expensive prices. At this rate, it is the used car business that has become the most profitable, with serious consequences on the environment. Sapiano’s proposal would be to lower registration tax on the purchase of new car, and have it progressively increased as the years pass. It is in fact the registration tax that makes cars in Malta expensive, but which also gives the state close to Lm24 million a year.
“By lowering registration tax and increasing it along the years, 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,” he told MaltaToday back in March.
matthew@newsworksltd.com
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