These major tax changes could make cars much cheaper in South Africa
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The National Automobile Dealers’ Association (NADA) says the automotive industry needs a significant financial stimulus package from the government which will allow it to accelerate its recovery processes.
The most effective way to increase sales will be to make new vehicles more affordable by reducing the huge portion of the purchase price that goes to the government in various forms of taxation, said NADA chairperson Mark Dommisse.
“These taxes make up only a part of the massive tax burden that motorists and transport operators have to ultimately bear, which includes for example the highly taxed fuel levy, annual licence fees, controversial toll fees, and a tyre levy,” he said.
How much of South Africa’s petrol price goes to taxes
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In addition to the increased cost of living and the high cost of vehicles, South African drivers are also paying for heavily taxed fuel, says National Automobile Dealers’ Association (NADA) chairperson Mark Dommisse.
“It is the biggest single cost factor for most transport operators and improving the quality of fuel to suit the latest low emission engines seems to have been put on the backburner,” he said.
Taxes and levies on fuel presently make up almost 70% of the fuel price. The Basic Fuel Price (BFP), which is made up of the international oil price combined with the rand/US dollar exchange rate, made up the largest component of the fuel price between 2009 and 2014.
• New car sales were severely affected with a decline of close to 30%.
• In the third quarter of 202
0 2.35 used vehicles were bought for every new car.
The economic fallout of Covid-19 dealt the local motor industry a heavy blow in 2020.
New vehicle sales dropped to their lowest number since 2003 as millions of South Africans struggled financially as the economy virtually came to a standstill.
A trend towards downscaling from more expensive vehicles to more affordable cars started as soon as dealers fully reopened in June after the motor industry was closed in April and only ran at minimal capacity in May.
While the pandemic has had a dramatic impact on business and industrial landscapes, both locally and abroad, one of the industries that had to adapt or die quickly is the automotive industry, in all its facets. This has meant rethinking how it does business and what stimulus packages would help get it firing on all cylinders again.
Motor manufacturers and importers indeed rallied to the flag with active and meaningful support for fighting the virus, right from its onset in March 2020. Subsequently, they have been very supportive of their retail dealer networks.
At NADA (National Automobile Dealers Association), we are very proud of how most of our members have been able to manage their businesses through this crippling pandemic. In some cases, the steps taken involved making tough decisions such as right-sizing, retrenching staff, and even considering relocating premises.
With the exception of the low volume Karry brand, each of Chery Auto s divisions had a great 2020, Chery itself becoming China s 12th most popular make, a y-o-y gain of five places. Nine consecutive months of expansion for the market, plus a wave of fresh vehicles has powered that progress.
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