Car prices: New report

Wheels24 has consistently alleged that high taxes - many of them hidden - are to blame for our out-of-kilter vehicle pricing, not manufacturer collusion or the Motor Industry Development Programme (MIDP), as claimed by the Government's Competitions Commission - without any subsequent evidence.

"Taxes account for 34% of the price of more expensive vehicles in South Africa, and there is a 17% differential in the price of cars in this category compared with the UK simply on the basis of the tax burden," said Dr Justin Barnes, the managing director of B&M Analysts and a co-author of the report.

The report was written in conjunction with Raphael Kaplinsky, a professor at the University of Sussex in the UK, and Mike Morris, a professor at the University of KwaZulu-Natal.

Barnes said the independent study compared the price of vehicles in South Africa and the UK but without all the taxes and built-in "free" maintenance programmes which apply in South Africa.

In Europe maintenance programmes are usually an extra-cost option.

South African taxes include the sliding scale excise duty, which gets as high as 20% on vehicles costing more than about R400 000, and 14% VAT in South Africa compared with 17.5% VAT in the UK.

"The perception is that vehicles are more expensive in South Africa than overseas, but this is a complete fallacy," said Barnes. "Our study bears this out.

"Vehicle prices in South Africa (minus taxes and maintenance programmes) are between 5% cheaper and 5% more expensive than the UK."

Affordability was another issue, and Barnes said there was an argument that South Africans earned a lot less than people in the UK, which affected vehicle affordability while interest rates were also higher than in developed countries.

He said this meant South Africans used a greater portion of their disposable income on vehicles than people overseas.

"The perception is that big multinationals are ripping people off.

"The evidence we have got is that that is not the case ... luxury cars are more expensive because of the massive tax burden," he said.