Tax increases likely to shrink market, says auto industry bodies

The substantial increase in ad valorem vehicle excise duty rates announced in the National Budget this week – with the maximum duty for motor vehicles rising from 25% to 30% – together with the increases in value added tax (VAT), emissions taxes and the fuel levy, “will compromise vehicle affordability in South Africa and will probably have a significant impact on the size of the domestic market”, says National Association of Automobile Manufacturers of South Africa (Naamsa) president Andrew Kirby. The premium car segments of the market will be worst affected, he notes.