The latest pronouncements against the South African motor industry by the Competition Commission once again makes claims of "excessive pricing" of local models compared with the prices of similar models in EU countries and the UK. The Commission said its investigations had revealed a premium of 14 percent in South Africa.

However, to sustain an excessive pricing case, the Commission first had to establish that a manufacturer or importer is dominant by having a market share of at least 35 per cent in any motor vehicle segment. This is not the case with any company in South Africa, so the case could not be pursued, although that did not mean the Commission did not consider prices excessive.

The Commission said it would keep a close watch on vehicle prices, while also participating in the Motor Industry Development Programme (MIDP) review process being conducted by the Department of Trade and Industry to highlight its concerns regarding the pricing of new vehicles.

These latest allegations follow a number of interesting and often conflicting articles in the media on the subject of comparing vehicle prices in South Africa with those in other countries. The MIDP has also been cited as a contributor to the so-called high prices.

One article, "SA Car Prices Compare Favourably" (Business Report on September 27) by economists Barnes, Kaplinsky and Morris came out claiming an investigation into UK and SA car prices showed they were similar when the various tax components and items such as service and maintenance plans were taken out of the equation.

It was disputed by David Kaplan, of the Graduate School of Business and department of economics at the University of Cape Town, in a detailed article in Business Report on October 20. Kaplan pointed out that a recent study by the European Commission's competition directorate had shown UK base prices to be as much as 34 per cent above the EU average, so comparing UK and SA prices was not the way to go.

Kaplan also went on to say: "The impact of the MIDP on local car prices and its consequent effects on business development and employment creation must remain a central concern".

Barnes, Kaplinsky and Morris did not take this criticism of their study lying down and hit back with another lengthy article in Business Report. They contend that South African car prices not only compare favourably with those in the UK, but do match the lowest in Europe.

Both these sources are used extensively in an in-depth paper on the "economics of the MIDP and the South African motor industry" by Prof. Frank Flatters, of Queen's University, in Canada. The paper is critical of the MIDP, with a major sticking point being the subsidy aspect of the programme. Flatters said the "subsidisation of an 'infant industry' or 'industry in transition' cannot be permanent." He believes the industry must be strong enough to operate in a normal economic environment if it is to have long term potential.

The emotional subject of car pricing will always be a subject for debate and will continue to suffer negatively from outpourings by often misinformed journalists and consumer pressure groups.