{"id":770535,"date":"2024-05-05T15:00:00","date_gmt":"2024-05-05T13:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=770535"},"modified":"2024-05-03T15:04:54","modified_gmt":"2024-05-03T13:04:54","slug":"the-cars-you-can-afford-on-the-average-salary-in-south-africa-right-now-3","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/motoring\/770535\/the-cars-you-can-afford-on-the-average-salary-in-south-africa-right-now-3\/","title":{"rendered":"The cars you can afford on the average salary in South Africa right now"},"content":{"rendered":"\n

New cars in South Africa are now pricier, limiting options for average earners, and there are now only 12 new cars available in their price range. <\/p>\n\n\n\n

According to the latest quarterly employment survey (QES)\u00a0published by Stats SA, the average salary in South Africa increased by 1.6% from R26,471 in August 2023 to\u00a0R26,894 per month in November.<\/strong> <\/p>\n\n\n\n

This was largely due to increases in industries such as trade, business services, manufacturing, construction, transport, mining, and electricity industries.<\/p>\n\n\n\n

This increase worked out to 2.3% year-on-year from the R26,298 in November 2022, which is significantly below inflation (5.5%) and the above-inflation increases in car prices (around 6.3%). <\/p>\n\n\n\n

Although the majority of non-agricultural workers in South Africa earn this monthly salary, they can only afford 12 new vehicles with it, as the cost of new vehicles has risen substantially over the years.<\/p>\n\n\n\n

According to TransUnion\u2019s latest Vehicle Pricing Index (VPI), the price of new vehicles increased by 6.3% on average in Q4 2023 alone.<\/p>\n\n\n\n

However, the price of a car doesn\u2019t reflect the true cost of ownership, as motorists must factor in monthly fuel costs, insurance, and running costs (maintenance).<\/p>\n\n\n\n

According to WesBank\u2019s estimates, the actual cost of ownership has increased <\/strong>by a staggering 50.6% since 2021 as a result of climbing petrol prices and sticky inflation. <\/p>\n\n\n\n

This is especially true considering that new car prices are increasing in South Africa and there\u2019s very little choice for those earning the average salary.<\/p>\n\n\n\n

TransUnion noted the income distribution of new financial agreements had minor changes with lower-income consumers unable to enter the market.<\/p>\n\n\n\n

“Economic constraints led many consumers to increasingly opt for more cost-effective mobility options, including older, less expensive used vehicles and alternative financing models,” the report added.<\/p>\n\n\n\n

The cars <\/strong><\/p>\n\n\n\n

According to financing experts, individuals should spend no more than 25% of their monthly income on vehicle-related costs \u2013 meaning those earning R26,894 per month should spend no more than R6,725 on vehicle expenses.<\/p>\n\n\n\n

This assumes the cars are financed over five years (60 months) at an annual interest rate of 13% (prime +1.25%), with a 0% deposit or balloon payment.<\/p>\n\n\n\n

However, the experts noted that vehicle-related costs include:<\/p>\n\n\n\n