Car prices - SA vs the world
- By Special Correspondent
- Published 07/28/2009
- Motoring Articles
- Unrated
By David Carte
www.moneyweb.co.za
General Motors admits that some of its cars in SA are up to 50% more expensive than in the US.
Toyota SA recently claimed that its prices in SA are competitive with those abroad and gave Moneyweb a table on five models in six different countries to back up its claim (see www.moneyweb.co.za). It could provide no comparison with the US because there was no equal model there.
GMSA provided a similar table on five models, showing that its prices in the US and Canada are significantly lower than in SA. But, compared to prices in the UK and Germany, GM's prices are competitive with those of SA.
The four-door Aveo notch back sells in SA for R144 370 - 50.8% more than the R95 720 US price tag. The Aveo supplied to both SA and the US is manufactured in South Korea.
The 5-door Aveo hatchback also fetches R144 370 in SA but goes for only R101 480 in the US, which means the SA car is 42% more expensive.
Doug Munro, vice president of planning at GMSA, attributed the differences in price to:
The Chev Captiva is 25% more expensive in SA than the UK but only R2 000 more expensive than in Germany. The Opel Corsa is 6% more expensive in SA than in the UK but in line with the price in Germany.
These cars represent roughly a quarter of GMSA's portfolio. The Isuzu and Corsa bakkies are its higher-volume vehicles but their prices in SA are not comparable.
Like Toyota SA, GMSA had no price comparisons with Australia but Munro said Australians do not get cheap cars. He said the Australian motor manufacturing and assembly businesses were being wiped out by an operating regime similar to SA's Automotive Production and Development Programme (APDP).
The APDP will reduce the duty on cars imported to SA from 28% to 25%. That will make cars cheaper but could devastate the local industry.
SA's 28% duty protection compares with 35% in Brazil, Argentina and Colombia, 40% in Thailand and 100% in India. Munro attributed some of the US industry's problems to import duties of only 2,5%. He said the US was competitive only in bakkies and SUVs, where duties were 25%. The Chinese industry was being given a huge boost by a too-cheap currency.
Munro said labour costs were cheaper in SA than in the US and Europe but not lower than those in India and China. Electricity has been historically cheap but big price increase could nullify this small advantage. Eighty percent of the cost of a car was material and this was definitely higher than in SA.
Munro said the uncompetitiveness of SA manufacturing was borne out by the under-use of capacity. With exports down 50% and local sales down by more than 30%, the industry is working at 40% of capacity.
'As markets improve the car companies will prefer to manufacture where they are most competitive. And SA is not it.
'I'm not saying assembly ends next week but let's just say it's challenging.'
GMSA has halted production of right hand Hummers and now assembles only Isuzu and Corsa bakkies in SA.
GMSA's prices are not as far out of line with those in Germany and the UK. The five-door Aveo here is 18% more expensive than in the UK but in SA you get a 1,6 litre engine, compared to 1,2 litres in the UK and Germany.
The Chev Spark is 20% cheaper in SA than its equivalent, the Matiz, in Germany. It is also 10% cheaper than the UK equivalent.
www.moneyweb.co.za
General Motors admits that some of its cars in SA are up to 50% more expensive than in the US.
Toyota SA recently claimed that its prices in SA are competitive with those abroad and gave Moneyweb a table on five models in six different countries to back up its claim (see www.moneyweb.co.za). It could provide no comparison with the US because there was no equal model there.
GMSA provided a similar table on five models, showing that its prices in the US and Canada are significantly lower than in SA. But, compared to prices in the UK and Germany, GM's prices are competitive with those of SA.
  
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The 5-door Aveo hatchback also fetches R144 370 in SA but goes for only R101 480 in the US, which means the SA car is 42% more expensive.
Doug Munro, vice president of planning at GMSA, attributed the differences in price to:
-
Low demand for small cars in the US;
- Under-pricing of small cars in the US to get average fleet fuel consumption down;
- Duties of 28% in SA compared to 2.5% in the US;
- Different trim levels;
- Distressed selling in the US.
The Chev Captiva is 25% more expensive in SA than the UK but only R2 000 more expensive than in Germany. The Opel Corsa is 6% more expensive in SA than in the UK but in line with the price in Germany.
These cars represent roughly a quarter of GMSA's portfolio. The Isuzu and Corsa bakkies are its higher-volume vehicles but their prices in SA are not comparable.
Like Toyota SA, GMSA had no price comparisons with Australia but Munro said Australians do not get cheap cars. He said the Australian motor manufacturing and assembly businesses were being wiped out by an operating regime similar to SA's Automotive Production and Development Programme (APDP).
The APDP will reduce the duty on cars imported to SA from 28% to 25%. That will make cars cheaper but could devastate the local industry.
SA's 28% duty protection compares with 35% in Brazil, Argentina and Colombia, 40% in Thailand and 100% in India. Munro attributed some of the US industry's problems to import duties of only 2,5%. He said the US was competitive only in bakkies and SUVs, where duties were 25%. The Chinese industry was being given a huge boost by a too-cheap currency.
Munro said labour costs were cheaper in SA than in the US and Europe but not lower than those in India and China. Electricity has been historically cheap but big price increase could nullify this small advantage. Eighty percent of the cost of a car was material and this was definitely higher than in SA.
Munro said the uncompetitiveness of SA manufacturing was borne out by the under-use of capacity. With exports down 50% and local sales down by more than 30%, the industry is working at 40% of capacity.
'As markets improve the car companies will prefer to manufacture where they are most competitive. And SA is not it.
'I'm not saying assembly ends next week but let's just say it's challenging.'
GMSA has halted production of right hand Hummers and now assembles only Isuzu and Corsa bakkies in SA.
GMSA's prices are not as far out of line with those in Germany and the UK. The five-door Aveo here is 18% more expensive than in the UK but in SA you get a 1,6 litre engine, compared to 1,2 litres in the UK and Germany.
The Chev Spark is 20% cheaper in SA than its equivalent, the Matiz, in Germany. It is also 10% cheaper than the UK equivalent.
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