Subaru has added its voice to the outcry over the affordability of vehicles on the South African market.

Subaru has added its voice to the outcry over the affordability of vehicles on the South African market.

Teresita van Gaalen, managing director of Subaru SA, said that a move to cut prices would have a ripple effect throughout the market and affect all vehicle owners. "Imagine having 20 per cent knocked off the value of your house overnight! Nevertheless, something has to be done to make vehicles more affordable and within reach of the consumer at large, she said.

"What is necessary is for the MIDP to fast-forward their bid for a maximum of 20 per cent import duty, which would ensure the consumer would realise the benefit," van Gaalen said. This will immediately force local manufacturers - most of whom are overseas-owned companies anyway - to match the prices.

A similar strategy had been successful in other countries which has resulted in growth and job creation, through the reduction of import duties.

"It is critical that expectations over new vehicle prices not be built on currency fluctuations, but that the move that is ultimately made be a sustainable one," Van Gaalen said.

Van Gaalen referred to Subaru's price-holding policy, which has been in place since October 2000. "We have averaged price increases of less than five per cent a year since then, compared to the industry's figure of three or even four times as much.”

Economist Tony Twine has noted that not all vehicles moved their prices alongside the cost of foreign currency when times were bad. He supports the view that the supply side of the new car market has a duty not only to aspirant new vehicle buyers, but also to existing owners, the finance houses who carry residual value risk, and the dealer networks.

Van Gaalen said: "It is from this relatively low price base that as an importer we are nevertheless continuing to optimise benefits for our customers in the light of the currency's revival against the dollar. It is a policy that has paid dividends, bringing Subaru a 54 per cent growth in retail sales this year compared to 2002, with the prediction of a similar growth for next year.

Van Gaalen said her optimism in repeating the 2003 performance next year was based on more than just offering affordability.

"I believe that a holistic approach is needed to solve the difficulties facing the motor industry in South Africa. Manufacturers and importers are genuinely looking for ways to make vehicles more affordable and finance houses must now also come to the party," she said.

Original article from Car