Sometimes, we hear about the price of some cars in the US, and become quite envious after comparing with South African car prices. Let’s see how different car prices in South Africa are compared to the rest of the world.
A 2017, WORLDWIDE SURVEY OF USED CAR PRICES
A February 2017 article by BusinessTech,1 mentions a survey done by an online car dealership based in the UK. Global Used Car Price Index 2017 provided prices of various car brands from 40 different car markets and economies. Most of the main car-manufacturing nations were surveyed, including South Africa. The reason for selecting a specific car brand was based on its worldwide popularity. When models could not be compared directly, other cars were selected with similar engines and mileage.
WHAT CARS, COUNTRIES AND EXCHANGE RATE WERE SELECTED FOR THIS ARTICLE?
Results1 revealed stark differences in used car prices worldwide. Prices were all in US dollars, but to make it more realistic for this article, they were converted to the ZAR equivalent, using an exchange rate of USD 1 = ZAR 14.12, as on 15 February, 2019. The dealership selected 10 cars of which the following four cars were chosen for this article: Chevrolet Spark, Ford Fiesta, Mercedes-Benz C180, and Volkswagen Golf. Out of the 10 countries, the USA, United Kingdom, Belgium, and South Africa were chosen.
HOW DO SOUTH AFRICA’S PRICES OF USED CARS COMPARE TO THE REST OF THE WORLD?
The cost of a used Chevrolet Spark was R96 650 (USA), R132 652 (UK), R111 523 (Belgium), and R150 166 (South Africa). A used Ford Fiesta would have cost you in 2017: R156 126 (USA), R147 398 (UK), R147 948 (Belgium), and R117 709 (South Africa). A used Mercedes-Benz C180 would fetch you R275 078 (USA), R265 092 (UK), R296 631 (Belgium), and R328 636 (South Africa). Finally, the price of a VW Golf would be R147 200 (USA), R156 959 (UK), R214 854 (Belgium), and R134 714 (South Africa). 1
WHERE DID SOUTH AFRICA COME IN THIS SURVEY?
As would be expected, the USA came first as the used car market with the lowest prices, whilst South Africa came fifth out of the 40. Singapore was found to be the country with the most expensive used car market, which can be blamed on the country’s shockingly high car taxes. 1
FACTORS AFFECTING THE COST OF NEW CARS
It isn’t that some company in South Africa decides that this must be the price of a particular new car, so that it can make lots of money. Many issues affect the price of a South African car, amongst which the most important one is import duty.2
IMPORTED CARS ARE CONSIDERABLY MORE EXPENSIVE
In 2011, a 36% customs duty was added to the cost of an imported car.2 In 2018, this had risen to 40%.3 Additional costs are R30 000 for sea freight and other duties such as carbon tax. It’s obvious that South Africa does not wish to encourage the importation of cars in order to protect the local manufacturing car industry.
THE RECENT VAT INCREASE ALSO AFFECTS CAR PRICES
Since the 1% VAT increase in April 2018, VAT at 15% also contributes to the cost of a car. For instance, a R350 000 car will cost you an extra R3 500 at 15% VAT, or an extra R10 000 for a R1 000 000 car. But, before we complain, VAT contributing to the price of new cars in Germany (19%) and the UK (20%) is really high.2
ANOTHER SURVEY WAS DONE IN 2011 ON NEW CARS
Although an IOL survey was done eight years ago (2011) on new cars,2 it is still interesting to see what the prices were. Taking a large sample of cars, IOL compared our South African prices with those of the equivalent cars in the UK and Germany.
LUXURY CARS SEEM THE MOST COSTLY IN SOUTH AFRICA
The 2011 survey2 found that a Porsche 911 Turbo cost R1 240 110 in the UK and R2 033 000 in South Africa. Even luxury cars such as the Lexus CT200h, the Audi A1 and the Mercedes-Benz C180 were then considerably more expensive in South Africa compared to overseas prices.
Although cars may be more expensive overseas, it is best to first do some homework to ensure you are not paying unnecessarily. When considering to buy a used or new car, protect it with affordable car insurance from Prime Meridian Direct.
Disclaimer:
This article was prepared by Eric Sandmann in his personal capacity. The views and opinions expressed in this article are the author’s own and do not reflect the views and opinions of Prime Meridian Direct (Pty) Ltd, FSP41040.The views and opinions in the article should not be attributed to anyone but the author unless expressly stated. Nothing in this article should be relied upon as advice, this publication is presented for informational purposes only. No person should act or refrain from acting in reliance on any information found in this article, without first obtaining proper financial advice from the appropriate professional. The author makes no claims, promises or guarantees about the accuracy, or completeness, of any information linked from, referred to, or contained in this article. The author reserves the right, to edit and change the content of this article.
Sources:
1 https://businesstech.co.za/news/motoring/155945/south-africas-used-car-prices-vs-the-world/
2 https://www.iol.co.za/motoring/industry-news/rip-off-sa-car-prices-vs-overseas-1115185
3 https://businesstech.co.za/news/motoring/243261/how-much-it-costs-to-import-a-car-to-south-africa/