Shock increase in driving costs to hit South Africa – here’s how much more you could pay

 ·11 Apr 2022

South African motorists have largely been able to save on travel costs over the last two years because of the Covid-19 pandemic.

However, getting back on the road and having to manage the actual costs of vehicle ownership now also need to be factored into what is for many an already constrained budget, says vehicle financing group Wesbank.

“It is important to understand the total monthly costs of vehicle ownership, whether the car is being driven more frequently or not.

“Fuel consumption might vary accordingly, but fixed monthly payments, such as the vehicle finance repayment terms and insurance costs, remain a constant and need to be included in the monthly household budget,” said Lebogang Gaoaketse, WesBank Motor head of marketing and communication.

This has led to South African motorists seeking affordability as a key consideration in the vehicle purchase decision, Gaoaketse said.

“This has seen the emergence of new brands focused on more affordable models, together with the introduction of many new entry-level options from established brands,” Gaoaketse said.

“These offerings also enable customers to tackle affordability at a lower price point, thereby lowering their monthly expenses, without sacrificing the benefits of new vehicle ownership.”

This can be better illustrated by analysing the total cost of ownership figures for the five years from 2017 to 2021. The figures indicate that a vehicle owner in 2021 was paying on average R1,000 more per month than in 2017 to own and maintain a car.

The projected figure for 2022 is further evidence of the wide-reaching impact of both global and local influences on the total cost of vehicle ownership.

The monthly cost is predicted to be R9,356.80, which reflects a 21.27% annual increase and is a staggering 39.41% (R2,650) higher than in 2017.

Wesbank based its calculations on an average entry-level vehicle (approximately R250,000) that travels approximately 2,500 kilometres per month.

The monthly cost of the vehicle ownership basket, comprising instalments, fuel, insurance and maintenance costs, has increased to R7,715.94 in 2021 from R7,583.76 in 2020 as a result of increases in interest rates and fuel costs.

While this reflects a percentage increase of 1.74% year on year, the 2021 average figure is 14.97% higher than five years ago, when the monthly cost averaged R6,711.24 in 2017, the group said.

In 2021, vehicle instalments and fuel spending remained the largest portions of the basket, accounting for 79% of the monthly spending.

Fuel spending accounted for 34% of the total, with the vehicle instalment amount sitting at 45%. The figures for 2021 show monthly fuel spend averaged R2,646, with the instalment rate significantly higher at R3,438. The monthly insurance cost was R1,274 or 16% of the cost, with running costs per month accounting for 5% at R358.

This is comparable with the mobility basket in 2017, where fuel spending accounted for 33% of the total at R2,210 and the vehicle instalment for 47% at R3,150. There has been a similar pattern since. However, 2022 might see fuel spending and vehicle instalment costs having an equivalent weighting with each accounting for 40% of the total.

These costs are reflected in the WesBank Mobility Calculator, a tool that tracks and calculates motoring expenses.

The total basket of costs comprises all the fees associated with vehicle ownership: the monthly instalment, comprehensive insurance premium, fuel and maintenance fees. These expenses are updated regularly to reflect current inflation and interest rates, and other fluctuating costs.

Increasing costs 

“As a result of vehicle price inflation over the past year, consumers have spent more on average for new and used vehicles in 2021, and this trend is likely to continue into 2022.

“In March this year, the average value of a new vehicle financed through WesBank was R368,615 compared to March 2020 when the figure stood at R356,343. This reflects a 3.44% year on year average price increase for new vehicles,” said Gaoaketse.

With vehicles being driven less during the lockdown period since March 2020, the average fuel spend is down 3.14% in 2021 from R2,732 in 2019. However, this does not mean the overall cost of motoring is lower.

“Vehicle owners should take a holistic view when planning a car purchase and ensure that they don’t overextend by right-sizing the spending to fit the budget, including the fixed monthly instalment amount, insurance costs, fuel spend and savings for maintenance and services.

“The budget should also make allowances for increased costs down the line, such as a higher interest rate or fuel price increase, as we are currently experiencing in 2022.

“The smartest move is to make provision for rising costs over the duration of the finance contract. Enabling a tool such as the WesBank calculator makes financial sense and is there to assist consumers to gauge the total costs associated with their vehicle ownership,” said Gaoaketse.

Read: How much it costs to drive South Africa’s most popular cars right now

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