WHY are SA Car Prices so much higher?

[a3dm86]

Three things you should take a look at:
1.Purchasing price parity.
2.The substitute market is not really well developed.
3. South Africa has a very high gini coefficient, therefore there are consumers willing to buy at those prices.

 

[Rouxenator]

Buy used and buy less often - that is one solution. Sadly in SA we have lots of people that want to be "in the loop". Buying cars with massive residuals and trading them in regularly just to keep up with the latest. Most dealers use in house finance so they are making a killing off the interest people are paying.

I broke the cycle by buying a used car 5 years ago, it cost me R100k and is worth less than R40k now. I did not use inhouse dealer financing and when I am done with it I will scrap it and do the same again.

People should stop keeping a dealer on their pay roll. Buy property instead - they stopped manufacturing real estate very long ago with a big bang.

 

[Picard]

Three things you should take a look at:
1.Purchasing price parity.
2.The substitute market is not really well developed.
3. South Africa has a very high gini coefficient, therefore there are consumers willing to buy at those prices.

You are not impressing those that know what the meaning of those fancy words are and neither are impressing those that don't.

What does parity and gini mean?

 

[a3dm86]

What does parity and gini mean?

P P Parity - Its like matching income with consumption. You can't match currencies directly, you have to consider what the "purchasing power" of each currency is.

Gini Coefficient - A measure of the distribution of income amongst the population. Higher meaning more skewed.

 

[ettubrute]

It's because retards keep buying it at these prices. They have no incentive to lower prices. Saffers never seem to be content with what they have, we always want more.

Correct. And profit margin!

So, STOP buying things you don't really need, and let the prices come down... Economics 101, which (it seems) no SA people ever heard of! Alternatively, negotiate! I got 30k off on a new car of 260k, just by haggling a bit!

 

[Bondizzo]

the industry is shady, ppl just accept the way it is but I dont. Have a nice car paid cash R25k , I'm going to get a second car next month and wont be spending more than R30k, the only way out of the loop is getting a 2nd hand imported vehicle, sadly only a few ppl can do that.

 

[KillerX]

Damn... R25k... cant get anything for that...

 

[Pitbull]

You guys have it all wrong.... not all but slightly at least

Look at vehicle churn in SA. People mostly buy cars to keep them. Very few people buy a new car every 2 years. That being said, in the UK car owners get penalised for driving older card for too long. Not directly but the taxes that needs to be paid once the inclusive period has run out causes the owner to rather trade in the car and by a new car with taxes included.

So, the new car sales in the UK is far higher than that of SA. Now the new car dealers need to make up for that loss and they do that by adding to the price of one unit.

Well that is how I see it anyway.

 

[metalcore]

Without having to read through the posts I can say that its clear that we are too status hungry in SA and are therefore willing to pay.

Add to this the fact that this is the country where businesses can and do get away with raping us and you have your answer.

This is the country to milk the consumer.

 

[nkpza]

Can anyone say the O word?

Take the following industries

1.) Banks (ABSA,FNB, Nedbank, Standard)
2.) Ceilular comms (MTN, Vodacom)
3.) Fixed line (Telkom)
4.) Food distributors (suppliers to the Pick n Pay's etc)
5.) Fuel (Sasol)
6.) Cars (any dealer and their prices)

They all start up and after obtaining a certain size, get together and fix prices and employ reams of lawyers, accountants and PR people to make sure anyone trying to compare prices for similar services are sued or spun till they give up.

The banks did this with the competition commission. There are differnces but not much really on call costs of the big 2 cellular providers. Has anyone seen food prices, or other dependent prices, drop after the oil price dropped to $40 - $60 a barrel? There are always excuses for why it cannot come done.

Anyway, one way to profit from all this is to buy their stock and hold on for the long term...

 

[werner]

You guys have it all wrong.... not all but slightly at least

Look at vehicle churn in SA. People mostly buy cars to keep them. Very few people buy a new car every 2 years. That being said, in the UK car owners get penalised for driving older card for too long. Not directly but the taxes that needs to be paid once the inclusive period has run out causes the owner to rather trade in the car and by a new car with taxes included.

So, the new car sales in the UK is far higher than that of SA. Now the new car dealers need to make up for that loss and they do that by adding to the price of one unit.

Well that is how I see it anyway.

not exactly correct.
tax is paid on emissions, generally around £180 a year for a medium sized sedan....think 1.8-2.5litre engine.
new tax legislation came into force early last year, and pre-2001 large sednas now pay less tax than post 2001 large sedans....so in a funny way it encourages people to keep their cars.
but because left doesnt know what right is doing, we now have a scrappage scheme...but that is another topic for another day...back to car tax....

a new car has to have car tax from year 0, but gets 3 years grace on MOT (roadworthy)..MOT costs around £50 and is a yearly compulsory inspection.

so you save £150 by buying a new car every 3 years..which pays for around 1 days depreciation.

Uk cars are cheap for a few reasons
1) metal rusts...
2) UK consumer generally doesnt have their own garage or mechanical skills, so repairs are always done at dealerships etc £££££
3) uk consumer likes warranties, doesnt like being stranded and gridlocking 5 highways.
4) cheap finance/twats who cant do maths. pay £99 a month and drive this new car away today!!!!!

generally, the attitude to cars is different here...it is just a tool to do the job.
for record, I sold my 100% perfect bmw 318i SE 1997 last month for £500, which is a fair price. I couldve held out for £800 and waited a month or two, but I wanted rid of it to make space for a new toy. still, that is R10000 or so. not much of a bargain here.

also, the company-car-culture generally doesnt exist as the personal taxation schemes make it pretty much unaffordable.

S.A. cars are expensive for one simple reason: the consumer is prepared to pay the price. they dont sell the product for what it is worth, they sell it for what they can get.