Why Are Cars Expensive In South Africa
In South Africa, it is not unusual for the government to keep up to half of the money spent on select luxury cars in the form of taxes.
South Africa perceives locally made automobiles as more expensive than identical automobiles manufactured and sold outside.
The major causes of these pricing discrepancies include variances in the markets and distribution, variations in model specifications, the inclusion of extras like motor plans, currency rate fluctuations, and taxes imposed on local auto sales.
But it’s not simply selling prices that matter. The entire cost of owning a car depends on a variety of variables, including gas prices, maintenance costs, the condition of the roads, and the amount of traffic.
Are vehicles too expensive in South Africa?
The budget segment has a lot of buying power for cars. Datasets are disturbing. If one were to judge the South African auto market solely by the quantity of new cars sold and middle-class salaries, it would appear to be nearly 100% overpriced.
What’s increasing the cost of new cars in South Africa?
Although the cost of owning and operating a car may be higher in other nations, initial vehicle selling prices in South Africa are still wildly inflated. Even countries with lower operating costs may not be able to afford to buy cars.
Taxation
Vehicle imports are subject to a number of taxes. Surprisingly, the ultimate tax that must be paid can be as much as 45% of the cost of the vehicle.
Not all automobiles made in South Africa are exempt from these tariffs
they’re imposed on imported parts and components as well, so neither, unfortunately.
Specifications for the models The “extras” that come with various car models vary greatly from one nation to another.
Entry-level vehicles in South Africa frequently have more supplementary features than is typical. Airbags, air conditioning, sound systems, and anti-lock brake systems (ABS) are features that consumers desire or even expect.
the feeble rand
Prices for new cars have soared as a result of the rand’s decline.
A minor change in the exchange rate may almost instantly cause the cost of an imported car to increase by tens of thousands of rand. Say, for the sake of argument, that an automobile costs US$30,000. That is R390,000 at a dollar to rand exchange rate of 13 to 1. Exchange rates are increased to 14 to 1
and the equivalent value in Rands is R420,000.
After taking all of this into account, it is possible that a vehicle exported from South Africa into another market could be 50% less expensive than what it is sold for here, depending on the assumptions you make about the market you are comparing South Africa with.
Will South Africa’s automobile costs decrease in 2023?
According to Motus CEO Osman Arbee, supply chain disruptions around the world, the availability of new vehicles, and pre-owned car pricing will all just begin to settle into a “new normal” in 2023.
Should I wait until 2022 to purchase a used car?
Rising used car prices may indicate that 2022 is a good year to buy, even though they are awful for people who can’t afford a new automobile the cost is worth it.
