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Why BMWs and Audis are so expensive to run

UPDATED: Mini/BMW comments on service charges.

JOHANNESBURG – If you drive a classy car, and live in Johannesburg, you can expect to pay more for the purchase price of your car, the parts, maintenance and even the labour rates per hour charged by the dealer, than in other parts of Gauteng, or in some cases, the country.

RGT Smart, the listed auto information company, surveyed 38 brands and 1 000 dealers countrywide to discover that [Johannesburg] motorists are paying R500-R550 an hour for workshop labour, compared with R200 an hour less in Vanderbijlpark, only 80km from the Johannesburg CBD. They found that the Free State has the lowest labour rates in the country.

The cheapest labour rates countrywide are on the Chinese Chana (R342/hour) and the Indian brands, Mahindra (R362/hour) and Tata (R385.30). The average labour rate across SA was R420/hour.

The car brands carrying the highest labour rates are Minis (BMW stable) at R602 an hour and Audi, whose dealers on average charge R583 per hour across the country. BMW is the most expensive medium brand to service and Volvo the cheapest.

Jaco van Staden, marketing boss at RGT Smart says: “Competition between brands is intense, so margins on most car selling prices are pretty small. The dealers make up on their captive markets in the cost of parts and in their workshops.”

RGT Smart reports that retail labour rates have grown at 4.1% year on year. Fiat’s rates have increased the most, rising 16.3% since 2011, followed by Alfa Romeo – up by 12%. Some brands have cut their labour rates – the Chinese Changan by 10.5% and Subaru by 5.5%.

RGT Smart CEO Paul De Vantier says labour costs are determined by the dealers themselves. Car prices and parts depend more on the marque.

Van Staden said “Taj Mahal” dealerships so evident in Sandton carry heavy rentals and have the effect of increasing their workshop rates as well.

RGT Smart also examined the cost of servicing commercial vehicles. These rose on average by 7.1%. The most expensive rates were on Mercedes-Benz and Hino. The least expensive was Tata, Iveco and UD Trucks.

 The information above consists of snippets from a thicker report. Not explained outside the report is why Mercedes-Benz does not feature among the most expensive among passenger cars.

The passenger brand with the best growth in the six months to June was Mahindra (up 248% to 758), followed by Kia (up 105% to 12776, Jaguar up 90% to 513 and Land Rover (up 90% to 3364). A number of smaller brands contracted dreadfully in spite of overall passenger car growth of 11.8%. Daihatsu was down 59.6%, Hummer down 50% and Proton down 47%.

RGT Smart disappointed investors by falling short of its prospectus forecast. Van Staden said the company’s business is analytics and decision support. He said there are already numerous products in the auto industry. Once items such as depreciation and parts prices are covered it will expand its analytical services to other industries as well.

As an aside, did you know that hijackers prefer black cars? So much so that insurance companies have loaded their premiums on black cars by up to 60%.

BMW South Africa group automotive communications manager Edward Makwana says the press release issued by RGT Smart has created the wrong perception about Mini and BMW vehicles being expensive to service.

“The release neglected to mention the fact that all new Mini and BMW vehicles are offered with a Motorplan. In the case of Mini, the Motorplan is three years/75 000kms and in the case of BMW, the Motorplan is five years/100 000kms. During this time, customers do not pay a cent for vehicle servicing or labour.
 
“In addition, Mini and BMW are amongst some of the most technologically advanced vehicles in the world. This level of technology requires highly specialised, skilled and trained technicians working in state of the art facilities. Our labour rates are defined accordingly and do not differ for customers who are out of their Motorplan. The rates only differ between urban and rural dealership,” says Makwana.

He adds that all of Mini’s dealerships are located in urban environments, “which explains the average Mini labour rate being higher than that of BMW.”

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