SA cars cost a lot more than they should

ED RICHARDSON IN THE latest probe into vehicle costs, the SA Competition Commission has found that SA consumers are having to pay more for new cars than their counterparts elsewhere in the world. The commission found that the price of vehicles imported in SA is 18 % higher for local consumers than in Europe. Domestically produced vehicles cost 8% more on average. Also, while the nominal price of both entry-level and benchmarked vehicles has been stable between 2004 and 2005, car prices climbed significantly in the preceding years. Although the commission acknowledges that the MIDP has benefited SA’s motor industry in terms of output, exports and employment, at the same time it believes that the programme has not benefited local motorists. According to the commission, high prices are caused by the MIDP’s tariffs on imported completely built-up vehicles and imported components. But industry representatives and commentators argue that rebates and drawbacks mean that the tariffs should not influence manufacturers’ costs. The report also found that prices on locally manufactured vehicles were aligned with prices of imported vehicles rather than the actual cost of manufacture. “Therefore, pricing of locally manufactured vehicles is based on consumers’ opportunity cost and manufacturers’ market power, rather than on correctly allocated costs of production,” states the report. In addition to this, some exporters are selling vehicles at lower prices to export clients than they are to domestic clients.