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Grant

South Africa
News24 User

'Confused about cars'

by Grant
2009-06-29 14:08

Dear Editor,

I'm a bit confused so maybe someone out there can help me to understand the logic behind the car manufacturers/importers and their pricing policies.

Prices have been hiked several times since late last year due to the rand devaluing.

That is reasonable, the price of your product increases so you have to increase the price you sell it at. Car dealers are closing left right and centre and car companies are going into liquidation due to lack of sales.

So then the Rand has been the best performing currency in the world for the last couple of months, it has appreciated by around 20 % against the euro and the dollar and around 30% against the Yen. Have prices come down? No, they are actually continuing to increase.

So you have an industry that is not moving product, they are buying cheaper and they put prices up?

Please someone explain why they think they are exempt from the free market forces that everyone else is battered by? I mean take Chrysler, a bankrupt company, who had another price hike on their Jeep products at the end of May.

Surely they would take their improved cost structures as they are now buying 20% cheaper and pass it on to stimulate sales.

Take BMW, they had a price hike in April and yet the rand is at a better level now than it has been since February 2008, about 10% better. So are prices now 10% better than 2008 levels? Are they at the same level to take into account 10% inflation? No they are around 20% higher!

All the manufacturers/importers are guilty of the same profiteering, although some are now offering cash back sums of up to R 50 000.

The argument that they are protecting second hand values is also a little dubious, this is a free market economy right? Then market forces must dictate prices and the manufacturers/importers should be as efficient as possible and not attempt to price fix.

Can the competitions board not look at why prices are still not being adjusted downwards? Or do they believe that the South African consumer really is that dumb and they can do whatever they want and we will just accept it?

Grant

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lestasti 6/29/2009 2:16:25 PM
We should not buy expensive cars

CTheB 6/29/2009 2:23:44 PM
There are presumably enough people still buying cars locally to sustain them. Also, as dealerships close the remaining ones get to dictate a little more since there are fewer dealers to play off against one another. The SA consumer has generally been a sucker when it comes to cars. Yes, the SA consumer may moan about car prices, but until recently that has never stopped them from going out and buying new cars. Many South Africans measure their personal worth by things like the car they drive which necessitates the regular purchase of new vehicles regardless of the sense of doing so. The motor industry here has been fuelled by that attitude and to some extent it still survives in spite of the downturn. The protection of second hand car prices is an argument that has never held water, if for no other reason than if falling new car prices see falling second hand prices it matters little since the person selling the second hand car doesn't have to realise as much money to help facilitate the purchase of a new vehicle. To some extent the rising unit prices are due to rising labour costs, but that certainly hasn't always been the case. The cost of vehicles here relative to income is massive, but that may be a function of not being a developed nation, though one does have to wonder about the high costs of vehicles that are manufactured locally.

cy 6/29/2009 2:23:57 PM
@Grant: I posed exactly the same question a few weeks back but was never published.

cy 6/29/2009 2:25:09 PM
...The current economic turmoil has had so many industries crippling down and the motor industry is no exception, infact its one of the hardest hit, the net result in some instances being closure of companies or massive retrenchments for other companies to try and stay afloat. It is being reported that the steel and rubber industries were affected to such an extent that they had to reduce price as the demand fell, this two industries along with others are the main suppliers of the motor vehicle manufacturing and having said this, the question of the vehicle pricing and the recent price hikes comes to mind.

Statistics have shown that vehicle sales have been declining since the start of this economic meltdown, however the vehicle prices is South Africa have been increasing at almost the same rate as the sales decline (inversely so). I have also seen in a few media publications that certain manufacturers/dealerships across the world turned to reducing prices and giving enticing deals to customers just to make some sales, the question on many South Africans is why have car prices in SA climbed so much? Why do we not see these desperate measures in the good old SA? Is it perhaps that the South African consumer is gullible (this I believe).

mike 6/29/2009 2:28:42 PM
The motor manufacturers have been increasing their prices ever since they came into existence in SA. Everywhere else in the world, manufacturers reduce their prices according to the economic climate. The SA manufacturers have been spoilt by the public supporting them without question. It is high time that the public stop buying cars at exhorbitant prices. I drive a little citi golf 1.4 and it cost me R1200.00 for my 1st service which was an oil and filter change. if i did that myself, it would have costed me under R400.00. For fear of losing out on the warranty, we are forced to have our cars serviced at ridicules prices.

JP Strauss 6/29/2009 2:31:22 PM
I say the competition board should look into this. Why must I pay R500 000 for a car that should realistically cost R420 000.

Glock 22 c 6/29/2009 2:35:07 PM
Its because the manufacturers know we dont have a decent public transport system and we are dependent on cars. Where country's with a decent system doesnt HAVE to buy cars.

CC 6/29/2009 2:35:13 PM
Look up 'cartel' & 'oligopoly'...
let me provide a hint: an association of competing firms formed in order to fix prices...
It's ILLEGAL and you a right: the Competition Commission should have investigated this a long time ago!

Frank 6/29/2009 2:36:17 PM
Grant, I work for a dealership and trust me I also want to know the answers to these questions. Manufacturers are bleeding the dealerships dry by halving their credit limits an forcing them to buy products from them that you as a dealership will not sell in your area. Yet the profit margins are almost non-existent at the dealerships due to write backs on the trade ins. Most of the cash back you see is also done by the dealerships themselves to try and get rid of non moving stock with very little assitence from the manufacturers.

IandI 6/29/2009 2:36:19 PM
Motor manufacturers seem to have the same attitude"If you have to ask the price, you can't afford it".

BigBoer 6/29/2009 2:36:41 PM
For years we have been saying the same thing. Nobody listens. And we can't stop buying cars because there's no safe, efficient public transport system. I am hoping that Tata or a chinese manufacturer can improve their quality so that we can start supporting them and then finally boycott the big guys who rip us off. The first manufacturer who breaks away from this cartel and gives us realistic prices will see big market share penetration.

Karen 6/29/2009 2:37:23 PM
Do you really think these companies would rather go into liquidation than reduce their prices? They cannot reduce the prices because their costs are going up. The bottom line is we cannot afford to buy cars anymore. Cars are a luxury item and an expensive one at that, so we are all going to have to pull in the belt and stick with the one we have or learn to ride a bicycle. Second hand car prices are apparently really good, so maybe have a look at those.

JDW 6/29/2009 2:40:44 PM
I purchased a car two months ago, but before I did that I looked around at various cars, I can tell you one thing I also went to the dealers with the idea they are desperate for business so I can negotiate a good deal. Well I got a rude awakening, most of the dealers are not interested to negotiate at all it is an attitude of this is the price take it or leave it, the only manufacturer that was prepared was Toyota, not even to mention all the dealers that promised to get back to you and never did,(and I mentioned to all of them it is a cash purchase so they dont have tow ait for finance) Volkswagen the big culprit here and Guess yes GM of all I thought they would be the quickest of the mark, they were the slowest. After about two months of search I did find a very good deal at a dealer in Malmesbury of all places that was prepared to negotiate and now I drive a Nissan after owing three Volkswagens, Good Luck to the people out there searching for cars.


Thandile 6/29/2009 2:42:03 PM
My Quote from Hyundai for my 75000km service was just below R6000.00. I then decided to buy all the spares incl Timing belt, and did everything myself - R2784.00 - just for all the parts (timing belt/Brake pads/ all 4 Belts / Spark plugs/ air filter / oil filter / 5L of oil/ brake fluid. How do you compare R2700 vs R6000 - for one days work ??

craig 6/29/2009 2:43:09 PM
Well said. Its also all the companies who are associated with the motor trade who are taking strain! I work with plenty of them who are on short time etc etc. If the car companies reduced their prices marginally wouldnt these companies on the side also benefit?

007Boer 6/29/2009 2:46:48 PM
The only cars I have ever seen that are worth every cent are the citiGolf's and the Corsa Lite's, everything else is over-priced or under-spec'ed depending on your view angle. I bought my Lite @ R69 995, which was an absolute steal seeing as it will only cost me a further R20 000 to have all the same features as a Mazda 2 1.3, which is R153 000, meaning I could actually buy two PLUS install all the extras and STILL have money left over for the holidays.

mduve 6/29/2009 2:49:09 PM
its not just in the car industry - In SA when it comes to business they all follow the same trend ,profit .... profit... and ...more ..profit.

The O 6/29/2009 2:50:25 PM
I think the South African market is the Cash Cow to most of the manufacturers . We just aren't fazed by the continuous price hikes hence the car manufactures keep on increasing it. It still boggles my mind how cars in the USA are half the price.....

Spiderman 6/29/2009 2:52:04 PM
Someone removed the minus key from their calculators?

Jayson 6/29/2009 2:53:03 PM
The Motor industry will feel that wrath of the inflation very soon.All those greedy manufacturers and dealers will lower their prices very soon.This is prophetic events unfolding read Revelation 18 about the fall of babylion(Global economies) Very soon they will be forced to lower cars of new imports

captain 6/29/2009 2:53:24 PM
Simple. Abolish the laws that prohibit the importation of 2nd hand vehicles into SA. One can go onto the net and find good ex japanese or singapore vehicles with low milage for literally half the price of the local version.

mduve 6/29/2009 2:55:01 PM
according to business in SA - there are no low, mid or high income earners. to them we all just earn the same. which brings me to this conclusion - I think that these people where empowered by the consumers in the past the same way that the TAXI industry was empowered in the late 80s and 90s - now these hoodlums are out of control.

Phine 6/29/2009 2:56:24 PM
I am an South African working in the an Arabian country in the Middle East. Here I can buy top of the range Toyota Land Cruiser for R 400 000. Same car is SA over R 800 000 ??? Hammer, MADE IN S.A, Is available at R 200 000, costing nearly double in S.A. We are been suckered in SA by motor industry and regulators.

Martin 6/29/2009 2:56:31 PM
Mike you where ripped off and we all are, I will buy the new car I want when the price is at what I want it to be. I bought a demo '08 1600 HC Getz with 8000km on the clock for R105 000, 00 in December, dealers are selling the '08 1400 HC Getz with 45 000km's on the clock also for R105 000,00... They must be insane?

Wisdom 6/29/2009 2:58:16 PM
If you are stupid enough to pay R 500 000 for a R 420 000 car then you should not complain...

Sean 6/29/2009 2:58:59 PM
I believe the South African consumer is being ripped off here. The 2nd hand market has some reasonable deals at the moment, however that only applies if you do not want to trade a vehicle in. The whole argumement of protecting 2nd hand prices is a pathetic one as you are currently likely to be offered less than half of book value for your car whether selling or trading in, however the price you must pay remains high This especially applies on a new vehicle which continues to escalate every three months, thus opening tha gap on the amount owing. Further, if you order a vehicle now and the price goes up next week you must pay the new price, however they will only honour a trade value for 7 days then want to re-evaluate when your ordered vehicle arrives.

oral 6/29/2009 3:00:19 PM
What gets my blood boiling the most: Cars made locally is sold cheaper overseas than you can buy it here??? As much as 20% cheaper! Go figure that one out???

Thabs 6/29/2009 3:01:28 PM
hear, hear, mike! we have always bought without asking why cars are this expensive. nothing has changed from the way they've done things in the past, it's just that now we're noticing because of the crunch. me and three friends are looking at changing our cars and none of us can say why the cars we're looking into are priced so high compared to the int'l market. they are playing us and it's high time we put a stop to it. in the meantime, i've put my plans on hold, my car still looks good and it's paid up, so why bother look for another one? but i must say the c-class is looking awesome, damn!

Peanut 6/29/2009 3:02:41 PM
I have a theory on why the car dealers do not reduce their prices but rather offer cash back. If they reduce their prices, and the economy recovers, the public would freak if they push up prices with 20 or 30%. However, if they do not reduce prices now, and give cash back instead, they don't have to increase prices later and can therefore continue to screw public like they did before.

alan 6/29/2009 3:07:00 PM
IMO there are two main reasons that car prices are insanely high in SA and have been for decades:
1) South Africans are generally proud to pay a lot for their vehicle as they see it as a public statement of their station in life. Prices are high because we are more than willing to pay.
2) Most finance is based on the resale value of the vehicle. The OEM's try to manage second hand prices via the new price, ie if a vehicle is worth X new then one could ask Y for it used at the same time. OEM's thus try and prop up this silly system by continually raising prices at the rate they require to manage used car prices to keep the existing finance packages out there liquid. The OEM's after all rely on the banks to enable the sale of their cars so they work together. Rather stupid isn't it? All driven (no pun) by people's desire to drive THE most expensive car they cant afford!

Ronny 6/29/2009 3:10:57 PM
They are NOT exempt from the normal free market forces. They are trying their luck at ripping off consumers, and unfortunately there are enough consumers dumb enough to pay these inflated prices.
It's simple, if we want lower prices, we consumers (the main free market force) MUST RESIST the urge to constantly buy new cars.

tucks 6/29/2009 3:11:01 PM
And vehicle manufacturers appear astounded that interest rate cuts have yet to stimulate interest in their product. Some have blamed the difficulty that potential customers face in obtaining financing but they're definitely not helping themselves with the price increases we're seeing as well as exorbitant prices of brand new vehicles like the Golf 6. I'm guessing their strategy is if someone is buying in this environment they must be desparate or stupid, so they're out to screw them on the price.

Aloha 6/29/2009 3:14:26 PM
@Mike, I understand perfectly well where you are coming from with regards to the servicing of cars. I recently took my car for its 100k service, was told that my windscreen wipers need to be replaced @ R200 then told that my brakes needed to be changed at R1500.00. I told them if they charged me for these changes they could keep the car. My husband then shopped around & did both these changes at less than R500 with original parts. The dealerships are just out to rip us off.

KARIN 6/29/2009 3:15:28 PM
It is said that good second-hand cars can be bought very cheaply now. Where? The second-hand dealers wants to make at least R10 000 on your old car, and another R10 000 on the car that you want to buy. This is for small cars. They will not even negotiate on this. R20 000 per deal or the highway for you. Where can one get these good deals that is supposedly available now?

Johan 6/29/2009 3:15:35 PM
I had to listen to a salesman last year whom said... You know, I have so much money that I can ask what ever I want for my product. If the consumer does not pay, I simply hold my item and I don't sell - easy as that, and I still have lots of money to live on. I think this car industry is the same, in SA we have probably not hit the investor's reserves hard enough yet. Sure they fire their employees on all kinds of levels, but maybe that just does not matter to the guy with the money?

BL 6/29/2009 3:16:31 PM
48% mark up on new vehicles at the dealers in SA. Go figure!!

So Now? 6/29/2009 3:19:59 PM
ok that said... what can be done about it? anyone?

LzK 6/29/2009 3:23:15 PM
Hey Grant, SA consumer is the most gullible consumer you can find, surely they will continue buying these expensive cars only to be repossessed six months later.

Frank 6/29/2009 3:27:28 PM
At those people calling for the competition commission to get involced. They've already done a study in 2005 somewhere. I think toyota paid a fine of R8 mil and a few other manufacturers as well. The outcome? We now only have a 'recommended retail price' given by the manufacturers in stead of a fixed retail price. Lot of help that was.

M 6/29/2009 3:29:17 PM
Two factors:
1) Motor industry being greedy
2) Govt tax that's ridiculous

It always comes back to the ANC regime doesn't it. Sad but true. They like to earn money by doing nothing.

MN 6/29/2009 3:30:33 PM
open the market for Ex Japanese car they are far cheaper and good than what we have on market,

ANNIE 6/29/2009 3:31:11 PM
jayson, Amen & amen

mike 6/29/2009 3:37:24 PM
I know i was ripped off.. but than for my 2nd service, which was identical to the 1st except that they changed the spark plugs as well.. they charged my almost R1700.00.. now where in the world does 4 spark plugs plus the labour cost you R500.00.. I have now decided that i will forsake my warranty and service my car myself. I think my savings will far outweigh the risk of losing my warranty..because the next thing they going to want to change is my brake pads, I can only imagine what that is going to cost me, an additional R800.00.

RR 6/29/2009 3:45:38 PM
Grant.
Your argument is valid:
Supply and demand forces should settle the price of a product at a market determined value. These are the free market forces you must be referring to. However, the functioning of those free market-forces are only that simple and clear in perfect economic conditions. If something is not sold, you simply drop the price until people start buying. If too many people are buying, simply increase the price until you can handle the volumes. Let’s assume for an instant, that SA implemented a national credit act that slowed new vehicle purchases by around 25% - somewhere in history.
Let’s further assume that most local manufacturers have to import some parts – that takes around 3 months. So, we have a huge decline in demand for cars (not part of the original forecasts to order parts) – fewer people now qualify for credit – and we are sitting with a lot of stock. This can be easily solved by the OE’s – given some time.
Alas, at the same time, the price of raw materials sky-rocket!!!! Metals almost cost triple the amount. And – guess what – cars are mostly made out of metals…..
But, that’s not all! Before any manufactured could recover from the local drop in sales (credit act) and take countermeasures for the soaring material prices – we are hit on a global basis by a small recession……(current condition).So, in summary:
There is currently an overstock of vehicles, manufactured with raw materials that WERE famously expensive. These vehicles are sold on an infrequent basis, due to the availability of credit (recession + credit act).
Do you suddenly expect the manufacturers to simply drop their prices – just to make sales? Do they simply disregard the input costs? How would they pay their remaining staff (after retrenchments) if they are making a loss for every vehicle they sell?
Would you do that?

JozGoli 6/29/2009 3:46:05 PM
The only thing that stifles S.A economic growth is pricing. We need to become sophisticated as consumers and demand these manufacturers / dealerships to quantify how they arrived at a particular price before committing to a transaction and if you are not happy with the answer given just vote with your feet, walk away. Banks on the other hand are not helping, who said they should charge 3 % or more above Reserve bank Repo Rate?

JanRaap 6/29/2009 3:49:34 PM
48%???
gullible????
Aloha?charge and keep the car??

I can not have a battle of the witts with unarmed pple?
Enjoy your lives,even though it is sad

Bernard 6/29/2009 3:56:27 PM
With dealer margins on bakkies at approx 12% and passenger cars at approx 8-10% and net margins of below 2% these days, I can assure you that the dealerships are not making the money. We are forced to buy stock at the factory at a fixed cost. The volume of stock we buy is strictly enforced by the factory's and they get their money immediately - we have to carry stock until it is sold.

But I understand why the public has little sympathy with us! Hopefully the current climate will sort out the trade.

Grumpy 6/29/2009 3:56:29 PM
While we're all moaning... someone please explain to me why in the UK a diesel car is around 15% cheaper than an equivalent petrol, and the purchaser can look forward to all sorts of tax breaks for buying diesel, while here in good ol' SA, we pay a 20% premium for buying diesel and have FA tax breaks for the effort?

Bandaz 6/29/2009 3:56:31 PM
Great article , the prices of cars is ridiclous.The competition comission should also investigate but one question i always ask myself is once these companies are found that they have been price fixing and they are fined millions , what happens to that money? where does it go to? e.g bread certain companies were fined bt i still did not see a decline in the price of bread instead its still at that price! so who benefits from all of this, it sure as hell not the consumer(i stand corrected )

@RR 6/29/2009 4:01:37 PM
Yes supply and demand should result in market equilibrium, however steel prices have halved since last year and the price in December 2008 was already below what it was in January 2008. So 7 months later and prices haven't budged ? The point here is prices have increased as a result of market forces, however they haven't decreased as a reslut of those same forces and that is a little odd. The car companies are buying raw material cheaper than last year at a better rate of exchange and we are paying 20% more ? And in a depressed market that just suffered it's worst decline in 24 years ?? Come on, something doesn't smell right !

Noddy 6/29/2009 4:02:52 PM
I do agree that prices are too high in SA. I am not defending the motor industry but..... @BL 48% markup?? I would love to see this. Also... imported vehicles are ordered on a 6 month cycle, but delivered monthly. Hence the price hikes on cars due to the weaker rand. Remember that cost price and recommended retail price are determined by the manufacturer, not the dealer.

Postcolonialist 6/29/2009 4:03:43 PM
PR (3.45pm) ... I believe the more appropriate commercial response to an overstock of high input cost items (= "expensive cars sitting doing nil") is to move the stock out the door ... yes, dropping prices will hurt future resale. But sitting on stock hurts even more (ask GM and others). Sometimes, biting the bullet and clearing the shelves is a better option. Cashflow, I believe.

As to "Would you do that?" - the answer is yes. With my back to the wall, it is better that I give my bank 80c in the Rand now ... and negotiate terms ... than my bank moseys(sp?) in and gives ME 1c in the Rand later, after my business has folded.

NCA or no, there are also alternatives to outright sale of vehicles (Ok, I do need to re-read NCA before I spout on these ... but they exist).

The rest of your piece is spot on, though.

But as long as SA motorists are so desperately driven by status and so on, the pricing will hold (in all likelihood).

Ivan@Spiderman 6/29/2009 4:04:17 PM
Good one, totally agree. The only minus they know is how to minus from your bank account :) @ Frank and other dealership staff, you guys must be going through a particular kind of hell, sympathes

DreshKay 6/29/2009 4:07:22 PM
@RR, I think you buy the bullocks sold by the auto industry without so much as putting your brain into gear. You assert that the price increase is justified based on skyrocketing metals prices induced by the recession. Metal prices have in fact collapsed and and are continuously dropping, except for gold, which has gone the other way. This puts paid to your argument and to that of the motor industry who feel it is their right to charge ridiculous prices irrespective of the market condition. Me thinks Barack has been easy on these dinos, I would have let them die a natural death. Think of the excessive costs to society as a result of these high prices....

Phelelani 6/29/2009 4:07:58 PM


i have recently taken my car for service as well I only changed brakes but guest what? I was told that my brakes disks are also damaged so I had to change them, in total I ended paying about R4000.00.

WildBill 6/29/2009 4:09:14 PM
I know ford has a policy that if a car is on its floor for more that 100 days i think it is, they sell it at only 10% profit. So this meens they try to rip you off, till the end...why not sell the car

Frank 6/29/2009 4:11:04 PM
RR your summary is correct however this does not answer the question as to why prices keep increasing. If manufacturers manufactured those vehicles when prices where high, then surely they can benifit from the decrease in input price by keeping prices the same? Their cost also came down since they've decreased their stockholding of both parts and assembled vehicles as well as a reduction in personnel.

shaun 6/29/2009 4:11:10 PM
The point is ,why do cars cost more in SA than elsewhere ? While we are making them.

Postcolonialist 6/29/2009 4:15:45 PM
Bernard (3.56pm) - To add to my earlier comment in response to PR - before anyone assumes I am suggesting dealers take a knock, my comments lie very much at the doors of the retailers ...

Dee 6/29/2009 4:16:30 PM
@ Martin

6/29/2009 2:56:31 PM.
..............

I used to work for GM. Its true what u are saying about the Hummer. When it was launvhed in the SA market the base was retailing for R374k. The wholesale price was approximately R275k. The strange this is that the Govt tender price was R250k, so if u were a govt employee who was in the govt's car scheme u could drive a Hummer for less than what the dealers pay....go figure!!!!

J 6/29/2009 4:17:37 PM
They will go the same way as the estate agents, down the drain.

Niel 6/29/2009 4:27:49 PM
But guys, you hold all the power! If you don't buy new and drive your old for longer just imagine what will happen.

Lorinda 6/29/2009 4:31:36 PM
Grant, Truer words were never spoken. The Car manufacturers do think SA consumers are stupid. They think they can get away with the daylight robbery that they are committing.

norman 6/29/2009 4:36:18 PM
The expensive car retailers dont need the public to survive as they do just fine with all the governments MEC'S and their cronies that never check the price or even ask for a discount.Viva Benz viva!

warmaster 6/29/2009 4:37:11 PM
Like Jeremy Clackson said: "The car and house you own now you will own for the rest of your life."

Greg 6/29/2009 4:41:54 PM
Great,the prices of cars is ridiclous.The price of steel and aluminum ar3e also much lower at than a yeay ago and these prices to have not reflected in the costings of new cars.Seems these excuses are only valid when prices need to rise.cars should be about 20% cheeper than about a year ago.

Zorba 6/29/2009 4:44:24 PM
@Thandile (6/29/2009 2:42:03 PM) Can you spell Warranty Void!
I know it's complete extortion!

Courtney 6/29/2009 4:54:42 PM
Wheels24 needs to ask Dr van Zyl from Toyota, also the MD from VW/MECR/Nissan/Ford/BMW. Some of there equipment has been paid off already eg. VW Golf production Line that was built in the late 80's for the Golf when they started..also Toyota's production line for the Toyota Hi-Lux..going now for +35 years.Fortuner gets build on almost the some production line....The only thing with Hi-Lux is that they have a huge expensive paint plant which is still new but the new Corolla and Fortuner uses the same paint & same diptanks!!!!

steve 6/29/2009 5:06:12 PM
When I was going to buy the new Audi A4 before they arrived they couldn't give me the cost they said it depended on the cost of the BMW3 at the time. And the say they don't fix prices.Grant we are all suckers I decided to keep the old one but that only works for a while.Maybe if we hang on long enough it might hurt them but i doubt it.

chris 6/29/2009 5:47:36 PM
The average South African motorist is obsessed by status, hence many people drive vehicles they CANNOT afford in order to impress people that they do not even know. That is why prices continually rise, because the vehicle manufacturers/sales dealers KNOW that they will always find another SUCKER!!!






Stephanus 6/29/2009 6:10:44 PM
I agree totally with this. But what we must also know is that if the vehicle companies pay goverment then goverment leaves them alone... this is my theorie as there is no reason why vehicles must be so expensive

Clive 6/29/2009 6:18:35 PM
It's not just cars. A friend of mine that's started studying through UNISA found his locally published cheaper on Amazon that he could find them anywhere in South Africa. That's including shipping and import duties.

Everyone is ripping us off, there are far to many middle-men that don't actually produce or do anything except "make money" from nothing.

Marcus 6/29/2009 6:41:19 PM
Karin: Try internet sites like carfind.co.za and gumtree (they were the 2 best I found). They search across the country or area you want and reinforce dealers or private individuals who give a good deal. After searching thoroughly for a for weeks, I just got a really good dealer on a 2005 SUV with low mileage. I got great service from the dealership first by email, then at the showroom. Also, I noticed that the model was priced R6000 higher in the showroom as they advertise on the net at a lower price which they give you if you are responding to the web advert.

Louis 6/29/2009 6:54:27 PM
What you mooks seem to forget is that supply and demand do not live in isolation. The car guys know that they will sell next to nothing in this market, except to those who really really really need to buy and South Africa is a very small portion of the world market. And they've conditioned us to except being ripped off. So why sell cheaper? If it really is a free marker they can do what they want? Or when is freedom of the market curbed? The fact is that free in its absolute sense is impossible, and also completely nihilistic and self-defeating. No system can function withou checks and balances. Self-regulation is no regulation: it then becomes a debate not of whether controls are required, but how many and where. Let me just state clearly: all the way to Communism will never work: that has been proven. The Chinese model is too exploitive even with its regulations; not an option either. We truely need to live up to the original meaning of Third World which was supposed to be an alternative to both pure Capitalism and pure Communism. We all want our liberties, but so does the motor industry (remember: free, liberty, contitution) bbut we do not want one persons freedom to infringe on our own. Organisation like the free market foundation are as much a joke as the communists. They both suffer from myopia brough on by their misunderstanding of where ideology fits into reality. Now I'm really off topic...

WhyVos 6/29/2009 7:15:16 PM
Look at the number of models sold in ZA. You would think there would be compoetion amongst the dealers, but instead they fuel and inflate the prices of cars. Why - if you don't drive the "right" car, you are not acknowledged by your "friends". All that counts is status in ZA.
We currently live in Canada. In North America there are only a limited number of brands sold. With the introduction of the Asian car brands the "big three" got competion and they had to readjust their whole way of marketing. The consumer ditates here. Some prices have fallen and deals now allow you to buy a vehicle at 25% discount.

Ziyaad bin Sayed 6/29/2009 7:22:30 PM
South africans are bein ripped off here,i drive a porsche in UAE but in South africa,i drive a hyundai for the same price,come on now SA,investigate car price fixing

Leon 6/29/2009 8:31:12 PM
You are so right. Consumers are dumb. They will buy a new car no mattr what the price.

wim 6/29/2009 9:33:32 PM
We are not deep in enough...wait till it reaches eye level...

Rosemary 6/30/2009 12:37:53 AM
We moved to Nz last year and had to sell our Outlander which I purchased new and paid R305.000 for in 2007.The same car in Nz cost $25.000 which works out to R125.000 - please can someone explain to me how there can be such a big difference in price.

Brian 6/30/2009 2:22:27 AM
It would be interesting to see how the price is structured, the taxes on patterns, which increasing manufacturing cost. Taxes on manufactures profit, taxed profit to the seller,then vat. Live and let die?

Ronald 6/30/2009 5:55:35 AM
A good old saying: The cheapest car is the one you drive now; if there is no reason to upgrade, why buy?

Hein 6/30/2009 6:11:14 AM
Its "old Bones" that we in SA pay ridiculously more for our cars than USA for example. Its the government that keeps these thieves in pocket by demanding that certain credit policies are employed by the banks to stimulate that market section. Now the manufacturers must either start to give better quality cars for at least thirty/fourty percent cheaper to survive or just plainly go down the drain where they belong.

AJ 6/30/2009 7:07:47 AM
The consumer is only ripped off when and if he pays the price. If you dont buy they will have to make a plan or go out of business. These things do resolve themselves.

Annoyed 6/30/2009 7:10:34 AM
Johann van Zyl, CEO of Toyota SA and the president of Naamsa is the person in charge of the car manufacturers cartel. Toyota SA colludes with other local manufactures to set the prices for vehicles in the different segments. It is not the luxury car manufactures that hurt the market; it is the like of Toyota, VWSA, Ford and Nissan who produce the most cars in the country and thereby control the local market pricing. Pity we cannot boycott them because it will hurt SA’s economy even more and they know it!

debi 6/30/2009 7:24:02 AM
Instead of us the consumer just bitching and moaning why don't we make a stand and say NO MORE? Has the South African consumer become so complacent? We have the final say, because we are paying, so lets stand together and do something about it and stop waiting for the inefficient competitions commission to do something about it!

Dr Dre 6/30/2009 7:26:36 AM
I don't think you understand the complexity of the problem. It's not as simple as drawing on recent exchange rates. You need to factor in things like the cost of credit, labour (which we know will only ever increase), raw materials (take a look at the average price of steel over the last 18 - 24 months if you're in any doubt). The fact of the matter is the price you see on the showroom floor today is a reflection of costs as they were 12 - 28 months ago, when the inputs were procured. Also, you DO have a choice, stick with your old car, you know there're nothing wrong with it. It's not as flashy as that new BM though, is it ?
The South African love affair with changing cars every three years actually exacerbates the problem. Add to this the protectionsit trade policies in SA, and well, you get a slightly more accurate picture. The industry alone is only one of the many parties to blame.......

Fandash 6/30/2009 7:31:56 AM
One of the reasons car dealerships are closing down is because of the arrogant attitude of sales staff. I walked into Forsdicks BMW Pinetown and stood on the floor for around 15 minutes waiting to be attended to. The staff were standing around having a chat and when I asked for assistance I got a rather bad attitude from one of the sales staff. No interest whatsoever. This same dealership's service manager was not interested in assisting me with a problem I had on my new vehicle. A letter to BMW SA complaining about the bad service has gone unanswered except for " one of our staff will get back to you in the next 24 hours". To date I have not heard a beep from them. Manufacturers deserve to be in the position they find themselves in with their could not care attitude.

JHS 6/30/2009 7:36:48 AM
The consumers are being taken for a ride. There are certain vehicles which landing cost (including duties, etc) ar R150 000, yet they sell for R600 000. In one year the price has gone up by +-R100 000 and now they offer a R50 000 cash back - you are being worked over. Most local manufacturers are owned by their parent company, which sells the vehicle to the local company at a profit, which also sell it at a profit. Then the government takes it share (+- 100% in different duties). Stop buying new cars. Their old say was "supply and demand" - reason for price hikes, and now? what happened to that. Protecting second hand vehicles? Have you tried to trade your vehicle in lately?

JHS 6/30/2009 7:43:11 AM
Cars prices are set according to what the manufactorer thinks that you the public will pay and not according to what the vehicle cost to manufactor. That is why they talk about segments.

Frank 6/30/2009 7:45:53 AM
Honda is a good example: When the exchange rate deteriorated prices soared. The exchange rate stabilized, prices stayed high. Now that the exchange rate is improving, prices are definitely NOT being lowered but, what they've done is to place expensive adds in the papers enticing us (the consumer) to, for instance, buy "...any diesel CRV at cost +2%...". Here's the remedy: Stop buying new vehicles and hold on to what you've got for longer.

Hman 6/30/2009 7:48:15 AM
Chaps,
I know the SA market is being ripped off and I have seen the evidence. I worked in the IT department at an "upmarket" manufacturer here in SA. 4-years ago they were selling the top of their top-of-the-line sedan to the dealer for R200k. That same car was selling for double that price in the dealership. That is a mark-up of R200,000 for very little value-add.
Yes your services and maintenance are included in the purchase price, but those costs will never come near R200k, especially when you consider the quality vehicle that you are getting.
The manufacturers are ruthless when it comes to the prices they pay to their suppliers! They are focused on driving down costs and improving profit, but the savings are never passed onto the customer.
If you work for a manufacturer, don't even try and deny this. I worked long enough in the industry to see how it works.

Unfotunetly for SA, the local manufacturers make more moeny from exports than they do from local sales. It would really take a lot of noise from the local market for them to sit up and take notice.
Boycott the new car sales and hold on to your existing car. Hopefully the Competition Commission will investigate and do somthing.
Cheers

JHS 6/30/2009 7:48:18 AM
Think of the transaction when buying another car. They offer you +-R20 000 under trade value and sell your car for retail value which is say R20 000 over trade value. So their they are making R40 000 + they make +-R40 000 from the other car, so they make R80 000 out of YOU!!!!

SD 6/30/2009 7:49:33 AM
The best thing the consumer can do is not to buy any cars for now, let's help all those new cars standing in showrooms ROT!!! When there was no recession the car manufacturers and dealers raped the consumer, now they want to screw us when times are difficult, STAND UNITED and let's show them who needs who!

SS 6/30/2009 7:49:41 AM
A few people have made very valid comments.The large portion of the selling price is made up of taxes and duties , even locally produced cars are subject to some duties. But there is one simple question , it the car companies are ripping people off and making so much money , how can they be going bankrupt ?

Just Saying 6/30/2009 7:52:36 AM
We normally have a culture of selling a few items at a high price rather than a lot at a lower price. So what we see is rather than drop the price to increase sales, they rather increase the price to maintain their profits and al long as people still buy these expencive cars, the motormanufacturers will continue increasing the prices.

The sam goes with something like the Land Cruiser 70 that we get with an old enjin. Just stop buying it and demand the one with the newer V8 diesel until Toyota bring it in. We moan and groan and go and buy.

ashk 6/30/2009 8:14:38 AM
Problem is the 'car culture' mentality engrained in South Africans. A car is the way you display how well off you are financially. Come up with something different at a ridiculous price and people will go or it. Value for money and economy doesn't come into the equation.

Freddie 6/30/2009 8:19:37 AM
And the best part is that all these cars are locally manufactured. Why the hype around the exchange rate?????

Retrosparki 6/30/2009 8:20:45 AM
While I agree with you fully Grant, irrespective of imported costs and the rand strength, a good is only worth what someone is willing to pay for it. the fact that the dealerships in SA aren't closing fast enough to indicate force these prices down suggests that the dealers are still making enough sales to stay afloat.

Secondly, I bought a brand new car 4 weeks ago at a discount of 21.96% from the listed retail price. So as we all know... the value of the cars isn't going up, just the prices, bargain your dealer into submission, its still a buyers market.

GeorGe 6/30/2009 8:31:09 AM
Apart from the blatant rip-off of the profite margin - ea manufacturer has far too many models available - they should be restricted to 2 for every design and say 3 diff colours - many years ago in the bad apartheid era Alpha Romeo had 9 different models ea with 11 diff colours to choose from and then ea with a diff cc engine with or without automatic gearbox, cloth or leather interiors, etc, etc. Take BMW 3 series - how many diff engine cc are availbe - why? This just pushes up the price. Restrict this practice. Stop the waste of choice. Put a ceiling on the mark-up. Those that belly-up- well - good riddance - you were not meant to be here in the first place. May the best man win and to hell with the rest. Let them go bang - who cares?

Ghadafhe 6/30/2009 8:58:11 AM
Oh poor south Africans we are failing ourselves. Price fixing followed by buyers still buying, is not done at a gun point, one chooses to throw themselves at the suppliers who notices that as South African Market due to trying insanely hard to live the western life, can finance everything including food by credit. Then an advantage is taken by these suppliers. Look it will never change "a price is conrolled by market forces,demand and supply" as soon as they(suppliers) notice that we are not going to spend what we do not have, prices will drop and make what we have in our pockets have more value. but still we need more natural resources therefore we should try and save more than spending more.

Nats@BL 6/30/2009 9:12:16 AM
48%??? That's not true. There is almost no profit in new cars at the moment. It's not the dealers but the manufacturers that are upping the prices of vehicles.

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