Trade Policy and the Auto Market
In South Africa, tariffs and import duties significantly influence the cost and availability of new entry-level vehicles. With most affordable models imported, changes in trade policy can quickly affect what’s on showroom floors and at what price.
Tariffs and Import Duties – The Price Drivers
South Africa’s import duties on vehicles range from 18% to 25%, with additional levies such as the ad valorem tax on higher-value models. For entry-level cars, these costs can push prices beyond budget-conscious buyers’ reach.
Key Impact: Every percentage point increase in tariffs adds to the final retail price, limiting affordability.
Impact on Stock Availability
Tariffs don’t just affect prices—they influence which models brands choose to import. If a vehicle’s post-tariff price exceeds its competitive bracket, manufacturers may opt not to bring it into SA, leading to fewer choices for consumers.
Result: Reduced variety in entry-level segments, especially under R300,000.
Brands Most Affected
- Suzuki and Kia: Popular for budget-friendly models, but higher tariffs can dampen their competitive edge.
- Chinese brands like Chery and Haval: Often priced aggressively, but may adjust lineups if margins shrink.
Potential Solutions and Strategies
- Negotiated Trade Agreements: Lower duties through bilateral deals could improve affordability.
- Local Assembly: Building vehicles locally avoids certain import duties, making models more competitive.
Conclusion: Policy Shapes the Market
Tariffs are a critical factor in determining both price and availability of entry-level cars in South Africa. Buyers should stay informed about trade policy trends, while manufacturers may need to adapt their strategies to keep vehicles affordable.
