Dismal SA car sales sees industry body calling for tax cuts to boost sector

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The September 2020 new passenger car market registered a decline of 23.9%, compared to the previous year. (iStock)
The September 2020 new passenger car market registered a decline of 23.9%, compared to the previous year. (iStock)
  • New vehicle sales for September improved from prior months, but it is still lower than levels recorded last year.
  • The industry body Naamsa has called for tax cuts on new vehicle purchases to stimulate more sales.
  • Naamsa also raised concerns over illegal vehicle imports, which robs the fiscus of tax revenue.


The National Association of Automobile Manufacturers of South Africa wants government to cut taxes on new vehicle purchases to stimulate more sales.

The industry body commonly known as Naamsa, which represents original equipment manufacturers Toyota, BMW, Volkswagen and others, on Thursday released new vehicle sales data for September.

It showed that new vehicle sales improved from prior months, coinciding with the easing of lockdown restrictions and an uptick in business activity, but it is still lower than levels recorded last year.

Compared to September 2019, new vehicle sale declined by 23.9%. For the year to date, the new vehicle market contracted by a third, compared to the same period last year.

Export sales also declined by a fifth, compared to the previous year. For the year to date, export sales have fallen by 37.5%, compared to the same period last year.

"The easing of lockdown restrictions to Level 1 during the month contributed to the uptick in business activity and new vehicle demand and drove the further improvement in business conditions in the South African manufacturing sector.

"However, business conditions remain far from normal and the new vehicle market is expected to remain under pressure in the current economic scenario," Naamsa said.

Naamsa called on government to reduce taxes on new vehicle purchases to stimulate new vehicle sales. "Combined with record low interest rates and low inflation, the automotive industry and the economy in general could hugely benefit should the tax burden on vehicles be reduced during this time," Naamsa said.

The industry also raised concerns over grey imports – or illegally imported vehicles – which it said is robbing the fiscus of tax revenue and hurts job creation, among other things. "Without doubt, grey imports displaces new car sales. Based on the suite of taxes applicable to new car sales locally, Naamsa estimate that this is costing the fiscus R3.8 billion per annum," it said.


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