South African car buyers might soon face higher prices at dealerships, with the country’s best-selling vehicle, the Toyota Hilux, expected to be among those affected if a proposed VAT increase is approved.
Finance house WesBank estimates that the planned VAT adjustment would translate to an additional R500 for every R100,000 spent on a new vehicle. For the entry-level Toyota Hilux, this could push the price from R361,700 to around R363,509 — a difference of over R1,800 — and even more for higher-end models.
Why Is VAT Going Up?
In his February budget speech, Finance Minister Enoch Godongwana proposed an increase in South Africa’s Value-Added Tax (VAT) rate from 15% to 16%, introduced gradually over two financial years — 2025/26 and 2026/27.
The increase is aimed at helping government close an R11-billion budget gap. Alternatives like raising corporate or personal income taxes were dismissed, as such moves could dampen investment, job creation, and overall economic stability.
Borrowing was also ruled out due to high costs linked to South Africa’s sub-investment credit rating, which would make large-scale loans unaffordable.
Raising VAT, however, spreads the burden across the entire population and is considered the most practical option for stabilizing state finances without cutting funding for essential services.
Potential Impact on Car Prices
VAT affects all consumer goods, but vehicles stand out because of their high price tags. Even a small change in tax can add thousands to the cost of a new car.
The National Automobile Dealers’ Association (Nada) has warned that a VAT increase would only deepen the financial strain many South African households are already feeling, forcing buyers to either delay or abandon plans for large purchases.
Here’s a look at WesBank’s estimated price impact on some of South Africa’s most popular vehicles:
- Model: Toyota Hilux
- Current Price Range: R361,700 – R999,000
- Potential New Price Range: R363,509 – R1,003,995
- Model: Isuzu D-Max
- Current Price Range: R452,400 – R1,182,100
- Potential New Price Range: R454,662 – R1,188,011
- Model: Ford Ranger
- Current Price Range: R574,000 – R1,270,000
- Potential New Price Range: R576,870 – R1,276,350
- Model: VW Polo Vivo
- Current Price Range: R271,900 – R363,100
- Potential New Price Range: R273,260 – R364,916
- Model: Suzuki Swift
- Current Price Range: R219,900 – R478,900
- Potential New Price Range: R221,000 – R481,295
Depending on the model, buyers could end up paying between R1,100 and R6,300 more than the current prices.
Toyota Hilux Key Features
Here’s a summary of the standout features that continue to make the Toyota Hilux one of South Africa’s best-selling vehicles:
| Feature | Description |
|---|---|
| Engine Options | 2.0L, 2.4L, and 2.8L turbo diesel |
| Transmission | 5-speed manual / 6-speed automatic |
| Fuel Economy | Around 7.1L / 100km (varies by model) |
| Towing Capacity | Up to 3,500 kg |
| Ground Clearance | 286mm |
| Infotainment System | Touchscreen with Android Auto & Apple CarPlay |
| Safety Features | ABS, EBD, airbags, stability control |
| Warranty | 3-year / 100,000 km |
Long-Term Costs Will Rise Too
Even if car manufacturers choose to absorb the VAT hike temporarily to ease the impact on buyers, other ownership costs will still increase. Spare parts, repairs, and routine services will all become more expensive as they’re also subject to the new VAT rate.
Insurance costs are likely to follow, as premiums are partly based on the cost of vehicle repairs — which will rise if components and workshop fees go up.
Is the VAT Hike a Done Deal?
Despite the Treasury’s reasoning, the VAT increase is not guaranteed. Political discussions suggest limited backing for the proposal beyond the ruling ANC, and the Tax Amendment Bill must still pass through Parliament before it can take effect on 1 May 2025. Until then, the future of new car pricing in South Africa, including the much-loved Toyota Hilux, remains uncertain — but buyers are being warned to brace for higher costs if the tax hike is approved.
Related article: How a 2% VAT Hike Could Impact
