DaimlerChrysler South Africa and BMW have lowered their new vehicle prices following the reductions in ad valorem tax announced by finance minister Trevor Manuel in his Budget speech in February.

DaimlerChrysler South Africa and BMW have lowered their new vehicle prices following the reductions in ad valorem tax announced by finance minister Trevor Manuel in his Budget speech in February.

Following the speech, automotive analysts believed that the reductions would result in manufacturers delaying or softening quarterly new vehicle price increases. At the time, CARtoday.com quoted an analyst as saying that the reductions could result in "cheaper cars becoming cheaper".

The new prices for both BMW and DCSA came into effect on April 1.

DCSA has either dropped new vehicle prices or, in the case of Chrysler and Jeep, added value to the selling price of its passenger cars.

DCSA management board member for sales and marketing Fritz van Olst recently said that the East-London based manufacturer wanted "to pass on the benefit of the duty

reduction to its customers".

"The relaxation in the duty has allowed us to lower new vehicle retail prices or alternatively add further value to the vehicle selling price," Van Olst added.

BMW said it had reviewed its current pricing strategy and customers could expect to see prices fall by about R1 500 at the lower end of the range to R10 000 at the top end.

“Over the past year and a half, the motor industry has had to pass on increased costs to automotive customers by way of price increases. We are now in a position to give something back to our customers,” said Ian Robertson, managing director of BMW South Africa.

CARtoday.com reported in February that Manuel had, after consultation with the motor vehicle industry, announced that the graduated formula for ad valorem excise duty on new motor vehicles be adjusted to address the inflationary element. This reduction in ad valorem duty will be gazetted during the second half of April 2003 with retrospective application to April 1.

On Mercedes-Benz passenger cars, the price reduction ranges from R1 500 on an A-Class to R15 000 on SL-derivatives, while Mitsubishi Motors passenger and light commercial vehicles decrease between R800 and R3 500.

In the case of Chrysler and Jeep models, the proposed price reduction of between R1 300 and R4 500 will, together with a nominal overall price increase, include a new three-year/60 000km scheduled services plan.

The new pricing of Chrysler and Jeep models "effectively offers customers more than double the value of the proposed ad valorem reduction," a DCSA spokesman was quoted as saying.

The maintenance plan covers all scheduled services during the period at no charge to the customer.

Original article from Car