The cost of owning and running a car has gone up substantially in recent years, according to calculations by WesBank.
The financial services provider stated that when looking at an “entry-level” vehicle which travels 2,500 kilometres per month, the monthly cost of the “ownership basket” is R7,584.
This is up from R7,851 in 2019.
The ownership basket includes instalments, fuel, insurance, and maintenance fees.
“While this reflects a percentage decrease of 3.41% year-on-year, the 2020 average figure is 15.5% higher than five years ago, when the monthly cost averaged R6,564 in 2016,” said WesBank.
Vehicle instalments and fuel spend remain the largest portions of the cost, it added, accounting for 79% of the monthly spend.
Fuel spend accounts for 34% of the total, with the vehicle instalment sitting at 45%
Compounding matters is the fact that car prices are rising in South Africa.
WesBank said new vehicles prices are rising faster than inflation, and the “Vehicle Pricing Index” increased to 9.6% in Q4 2020
“As a result of the vehicle price inflation over the past year, consumers have spent more on average for new and used vehicles in 2020, and this trend is likely to continue into 2021.”
In practical terms, WesBank said it has seen the average cost of new vehicles financed through it change as follows:
- January 2021 – R358,390
- January 2020 – R327,723
Working from home
For South Africans working from home, or spending less time at the office, WesBank said this will see them put less mileage on their cars.
Even if a car is being driven less frequently, however, fixed monthly payments – like a vehicle finance repayment – remain and still need to be considered in the monthly household budget.
“With vehicles being driven less since the first lockdown period in March last year, the average fuel spend is down. However, this does not mean the cost of motoring is lower and, while interest rate cuts are always welcome, this alone shouldn’t influence a vehicle purchase,” said the company.
“Motorists should take a holistic view when planning a car purchase and ensure that their budget can accommodate the instalment amount, insurance costs, fuel spend, and savings for maintenance and services.”
“Their budget should also be able to absorb higher costs down the line, should interest rates or the price of fuel increase, for example.”