WesBank says the average cost of motoring in South Africa continues to “rise steadily”, with the latest figure sitting at nearly R8 000.
The firm’s monthly mobility basket, which comprises vehicle instalments, fuel, insurance and maintenance fees, has risen to R7 851,39. This is 3,0 percent higher than 2018’s figures, and 28 percent higher than five years ago when monthly costs amounted to R6 144,22.
The total mobility basket comprises all the fees that are involved with vehicle ownership: a monthly instalment, the insurance premium, fuel and maintenance fees. WesBank says these expenses are “regularly updated to reflect inflation, interest rates and other fluctuating costs”, and are based on an “average entry-level vehicle” that travels approximately 2 500 km per month.
Vehicle instalments and fuel spend remain the largest portions of the monthly mobility basket, accounting for 80 percent of monthly spend. However, when viewed as a portion of the monthly motoring budget, WesBank says fuel spend is “significantly less” in 2019 compared with five years ago. Fuel spend accounts for 35 percent of the total this year, while vehicle instalments are 45 percent. This contrasts with the mobility basket in 2014, where fuel spend and vehicle instalments cost about the same amount.
“In 2014, fuel prices were on the rise and monthly fuel spend was roughly equal to an entry-level vehicle’s instalment,” said Ghana Msibi, WesBank executive head of motor.
“This is no longer the case, and despite monthly fuel price hikes from February to June 2019, this month’s fuel prices are actually lower than they were during July last year. This does not mean the cost of motoring is lower,” he added.
Vehicle instalments and insurance premiums account for the highest increases over the past five years, says WesBank, mainly as a result of vehicle price inflation. From 2014 to 2019, vehicle instalments increased 43 percent, while insurance premiums grew 40 percent. In comparison, fuel spend and maintenance fees grew 11 percent and 8 percent respectively over the same period.
WesBank’s data further indicates “favourable vehicle price inflation” over the past year, with consumers only spending marginally more on new and used vehicles.
In June, the average new vehicle financed through WesBank cost R321 715, while the average used vehicle cost R215 848. This reflects a 3,0 percent and 2,0 percent year-on-year change for new and used vehicles, respectively.
“Interest rate cuts and lower fuel costs are always welcome, but this shouldn’t influence a vehicle purchase. Motorists should take a holistic view when planning a car purchase and ensure that their budgets include the instalment amount, insurance costs, fuel money and savings for maintenance and services.
“Their budgets should also be able to absorb higher costs a few years down the line. The smartest move is to plan for rising costs over the duration of the finance contract,” said Msibi.