Owning a car is about to get a lot more expensive in South Africa

Petrol and diesel prices are rising sharply this week, which will directly influence the overall cost of car ownership for all motorists in South Africa.

Price hikes are the result of several factors, including higher fuel levies, the under-recovery of fuel costs, a weaker rand/dollar exchange, and higher oil prices as the Middle East conflict continues.

Fuel is one of the highest variable car ownership costs, and according to Naked Insurance, fuel price increases are an important reminder for drivers to review their car-related costs and driving habits.

“The conflict in the Middle East has caused a shock to oil supply and sent prices soaring,” said Ernest North, co-founder of Naked Insurance.

“Prices may increase further if the war intensifies, and even if it ends soon, it may still take time for oil prices to normalise.”

North notes that apart from motorists feeling the pinch at the pump, higher oil prices may cause the prices of other goods to increase, and could even prompt the Reserve Bank to hike interest rates.

“The reality is that if fuel prices continue to spike, we may re-enter a period of high inflation, which will affect the cost of car ownership in many ways,” he explains.

“Drivers should be aware that they may face higher interest rates for car loan repayments and steeper maintenance and repair costs.”

He explains that South Africans may even see clothing items, food, and other monthly essentials rise due to higher fuel and transportation costs.

“Against this backdrop, it is wise for motorists to review their car-related costs,” North advises.

Steep ownership cost increases

Naked Insurance broke down what the petrol and diesel price increases may mean for South Africa’s motorists, based on a fuel efficiency of 6.7l/100km, and an average monthly driving distance of 1,000km.

Their calculations are as follows:

Petrol 95 inland:

• March price at R20.30/litre – R1,353 per month 
• Expected April price of R26.33/litre – R1,755 per month
• Increase – R402 more per month 
• Annual impact – R4,824 more per year 

Diesel 0.05% inland (wholesale):

• March price at R18.53/litre – R1,235 per month 
• Expected April price of R28.88/litre – R1,925 per month 
• Increase – R690 more per month 
• Annual impact – R8,280 more per year 

Naked notes that oil prices are expected to remain volatile and continue to climb further for as long as the conflict in the Middle East continues.

Their table illustrates how future increases could affect monthly petrol costs, assuming a fuel efficiency of 6.7l/100km, or 15km per litre:

North advises motorists to carefully consider the full cost of car ownership, especially those who are in the market for a new car right now.

“You need to look beyond the purchase price or monthly car repayment. Insurance, fuel, unexpected repairs, routine services and maintenance also need to be considered,” he says.

“In today’s context, it makes sense to budget cautiously rather than splashing out on the latest and best model you can afford.”

North suggests leaving room in your budget for additional fuel price increases, higher insurance costs, and rising maintenance costs.

He added that Naked expects many South Africans will look at more fuel-efficient cars if fuel prices continue to rise.

“The current environment could also boost interest in electric vehicles,” North mentions.

“While electric vehicles are still expensive in South Africa, there are more budget-friendly models from emerging brands reaching the market.”

Buyers who are looking to save themselves from the imminent petrol and diesel price increases also have a long list of hybrid vehicles to look at – North notes that these are a good fit for people who do a lot of driving.