As mentioned in the previous edition of MIND, there continues to be a breathless hush from the Competition Commission after its sabre rattling earlier this year about alleged actions by dealers that impacted negatively on vehicle affordability, which has long been a hot topic in South Africa.

The National Automobile Dealer Association (Nada) had meetings with the Commission and has followed up with written requests for more details on the accusations. It has told its members to "sit tight" and not to approach the Commission directly. It will be interesting to see how long this impasse continues.

There is also a lot of irony in the Competition Commission's investigation into vehicle pricing, because it has come at a time when prices have remained stable for a longer period than most people can remember; there have been no significant general price hikes for about three years now. In this time at least 100 feature-packed models have been launched at very competitive prices to increase the scope of offerings in South Africa to one of the widest in the world.

One of the recent claims by the Commission is that it believes the Motor Industry Development Programme (MIDP) may be the main reason for what they consider are "high car prices." Several individuals and organisations have disputed this claim.

Interestingly, an in-depth study by three academics, including a Professor from the University of Sussex, has shown that taxes are to blame for the discrepancy in the prices of vehicles in South African and the United Kingdom. When South African car prices are shorn of VAT and excise duty, which can amount to as much as 34 per cent, as well as "added value" items such as service and maintenance plans then they compare favourably with UK prices less 17,5 per cent VAT.

The detailed study compared prices of cars in three segments - those models exported from South Africa, those available in South Africa only as imports and locally manufactured entry level cars (Tazz and CitiGolf) vs bottom end Malaysian-sourced offerings in the UK.

The only significant gap was in the entry level and here the researchers said the larger and sturdier extended life Toyota and VW models were better suited to driving conditions in South African than the Malaysian Perodua.

Meanwhile a number of industry commentators have commented on the "imported vehicle surge embarrassing MIDP architects." The flood of imports has crated an all-time high in the extent of the deficit in the country's motor sector. The deficit for 2004 was R18,8-billion as exports stuttered on the back of a strong rand and as exporters started new model life cycles. In 2003 the deficit was less than R10-billion. Last year the number of imports into South Africa far exceeded the volumes exported - 150 000 imports to 111 000 exports.

It remains to be seen what the task team currently reviewing the MIDP will propose to counter the rising international trade deficit going forward.

Meanwhile the government has committed itself to continue supporting the automotive sector after the expiry of the MIDP in 2012. However, at this stage there is no indication what form this support will take. This is can be of concern to multinationals currently investing huge amounts of money in export expansion projects. Model lifecycles vary between four and eight years, so for some manufacturers it is a case of knowing sooner rather than later what the government envisages after 2012, as it could impact on their future production and export plans.