In South Africa, a significant portion of the most beloved vehicles are crafted right on home soil, while others are imported from nations like India and China. While brand, model, and body style significantly influence consumer choices, the location of manufacture can subtly sway purchasing decisions, even if it often goes unconsidered.
The Impact of Manufacturing Location on Vehicle Pricing
One of the most impactful factors is pricing, as the country of assembly can significantly affect the overall cost of a vehicle. According to Naamsa (The Automotive Business Council), between 18% and 42% of the price of a new car can be attributed to various import taxes. These taxes include:
- Value Added Tax (VAT): 15%
- Ad Valorem Tax: Calculated per vehicle, with a cap of 30%
- CO₂ Emissions Tax: Ranges from 2.5% to 6%
- Import Duties: Typically 25% (or 18% if sourced from the EU)
When vehicles are manufactured locally, they avoid a large chunk of these fees, resulting in lower prices compared to similar imported models.
For instance, consider the locally assembled Ford Ranger, which retails for R522,600 in South Africa. In the UK, where the Ranger is also sold, the starting price for the equivalent model is £36,690 (including VAT), translating to approximately R852,000 at current exchange rates. While direct comparisons can be complicated due to differing tax regulations and vehicle specifications, this example highlights the financial benefits of local production.
Manufacturers without domestic production facilities often turn to countries with lower labor and operational costs, such as India and China, for their vehicles. This strategy minimizes production costs and import taxes, enabling them to offer competitive prices to consumers.
Mazda's Discontinuation of the BT-50 in South Africa
A recent case in point is Mazda’s discontinuation of the BT-50 in South Africa. The latest model was sourced from Thailand, leading to increased import taxes that resulted in uncompetitive pricing compared to homegrown rivals like the Toyota Hilux, Ford Ranger, and Isuzu D-Max—South Africa's top-selling bakkies.
Over the entire year of 2023, the BT-50 attracted only 69 buyers, while the Hilux, Ranger, and D-Max recorded sales of 37,382, 24,618, and 18,962, respectively. As a result, Mazda decided to retire the BT-50 just three years after its launch in 2021.
Craig Roberts, Managing Director of Mazda South Africa, remarked:
“The South African light commercial vehicle market, especially the double-cab segment, is highly competitive and dominated by locally manufactured brands. The challenging landscape for imported vehicles has compelled Mazda SA to make this tough decision.”
Although often overlooked by consumers, the country where a car is produced plays a significant role in shaping purchasing habits.
The Top 10 Best-Selling Cars in South Africa: Where They’re Made
Below is a snapshot of South Africa’s best-selling vehicles as of July, highlighting where each is manufactured and their starting prices:
1. Toyota Hilux
- Manufactured in Durban, South Africa
- Starting price: R361,700
2. VW Polo Vivo
- Manufactured in Kariega, South Africa
- Starting price: R266,600
3. Ford Ranger
- Manufactured in Silverton, South Africa
- Starting price: R514,800
4. Isuzu D-Max
- Manufactured in Gqeberha, South Africa
- Starting price: R447,900
5. Toyota Corolla Cross
- Manufactured in Durban, South Africa
- Starting price: R408,400
6. Hyundai Grand i10
- Manufactured in Chennai, India
- Starting price: R224,900
7. Toyota Starlet
- Manufactured in Hansalpur Becharaji, India
- Starting price: R252,100
8. VW Polo
- Manufactured in Kariega, South Africa
- Starting price: R357,500
9. Chery Tiggo 4 Pro
- Manufactured in Wuhu, China
- Starting price: R279,900
10. Nissan Magnite
- Manufactured in Chennai, India
- Starting price: R240,000