The Cambodia Automotive Industry Federation (CAIF) has asked the government to increase taxes on vehicles sold in the grey market and prohibit the import of second-hand cars in order to protect the interests of consumers and level the playing field for authorised car dealers, it said in a press release yesterday.

The federation, which consists of more than 20 authorised automobile distributors, said it will ask the government to impose a 150 per cent tax on all grey market vehicles, and consider banning the entry of second-hand cars in line with similar practices followed in other ASEAN member nations.

“Now it is almost like a penalty to sell authorised cars because grey market sellers are playing the invoices of these cars and selling them for less,” CAIF president Peter Brongers said.

He explained that authorised dealers were expected to pay upwards of 100 per cent in taxes for legal imports of new vehicles, whereas many grey market sellers were not charging consumers value-added tax.

This meant that of the around 45,000 cars imported last year, of which 10 per cent were by authorised dealers, close to 40,000 vehicles were sold without paying the correct amount of taxes, Brongers said.

The CAIF will launch a campaign this year to educate potential car buyers of the risks of buying from non-authorised dealers, suggesting that they look at the conditions of the vehicle rather than just price, he added.

Another demand from the group is a complete ban on second-hand cars or prohibiting the import of cars older than 10 years, referring to similar restrictions in Vietnam where cars older than five years cannot be imported.

According to the federation, seven ASEAN members currently prohibit the import of second-hand vehicles and the lack of a similar regulation in Cambodia has made the country the “junkyard” of ASEAN.

“We are the only country that allows the import of used cars, so all the bad cars come here,” Brongers said. “We are getting cars that other countries are taking off their roads.”

The import of new and used cars grew by 10 per cent last year, with the industry expecting a similar increase this year. Authorised dealers account for just one in 10 of all vehicle sales, according to CAIF estimates.