How much does it cost to own a car in South Africa right now
With interest rates currently at an all time high, one would assume that vehicle owners would have more money in their pockets.
However, those savings were largely offset by the financial pressure that many consumers have suffered due to the country’s varying levels of foreclosure, said Lebogang Gaoaketse, head of marketing and communications at WesBank Motor.
This includes managing the actual cost of owning a vehicle as part of a total monthly household budget, he said.
“While the current low interest rates and savings on general vehicle maintenance and fuel consumption are good news for car owners managing a vehicle finance loan, it is important to understand the costs. monthly vehicle ownership totals.
“Even if a car is driven less frequently, fixed monthly payments, such as vehicle finance repayment terms and insurance costs, remain and should be included in the monthly household budget.”
Considering an average entry-level vehicle that drives approximately 2,500 kilometers per month, the monthly cost of the vehicle’s ownership basket, including installments, fuel, insurance and maintenance costs, went to R7.584 in 2020 from 7 851 R in 2019, due to lower interest rates and lower fuel consumption.
While this reflects a 3.41% year-over-year percentage decrease, the 2020 average figure is 15.5% higher than five years ago, when the average monthly cost was of R6,564.
These costs are reflected in the WesBank Mobility Calculator, a tool that tracks and calculates automobile expenses.
The total basket of costs includes all the costs associated with owning a vehicle: the monthly payment, the all-risk insurance premium, fuel and maintenance costs.
These expenses are updated regularly to reflect current inflation and interest rates, as well as other fluctuating costs.
“It is important to remember that this monthly vehicle ownership basket figure is based on data that constantly evolves according to market activity and is therefore only given as an indication.
“The economic impact of Covid-19 last year will have created an anomaly compared to 2019 data, so this should also be taken into consideration when considering the total figure for 2020,” Gaoaketse said.
Bad news
The bad news, however, is that vehicle prices continue to rise, with TransUnion SA’s Vehicle Price Index (VPI) for the fourth quarter of 2020 indicating rising costs for new and used vehicles.
The IPV of new vehicles rose to 9.6% in the fourth quarter of 2020, compared to 2.9% in the same period in 2019, while the price of used vehicles rose to 2.9% from 1.2% in the fourth quarter of 2019.
With the CPI standing at 3.3% for the fourth quarter of 2020, new vehicle price increases remain above inflation and are expected to rise further in the coming months, according to the latest VPI data from TransUnion SA.
“Due to vehicle price inflation over the past year, consumers spent more on average on new and used vehicles in 2020, and this trend is expected to continue into 2021.
“In January of this year, the average value of a new vehicle financed by WesBank was 358 390 R compared to January 2020 when the figure was R327.723. This reflects an annual increase in the average price of 9.4% for new vehicles, ”said Gaoaketse.
In 2020, vehicle installments and fuel expenses remained the largest parts of the basket, accounting for 79% of monthly expenses.
Fuel expenses accounted for 34% of the total, and the amount of installments for vehicles was 45%. Figures for 2020 show that monthly fuel expenditure averaged R 2,566, with a significantly higher payout rate at R 3,433.
The monthly insurance cost was R 1235 or 16% of the cost, with the running cost per month being 5% at R 350.
This differs from the mobility basket in 2016, where fuel expenditure and vehicle down payment costs were more comparable – the average monthly fuel expenditure was R 2,287, slightly lower than a vehicle’s net down payment. entry level of R 2,976.
“With vehicles circulating less since the first period of lockdown in March of last year, the average fuel expenditure is down 6% from R 2,732 in 2019,” Gaoaketse said.
“However, that doesn’t mean the overall cost of the automobile is lower, and while interest rate cuts are always welcome, that alone shouldn’t influence the purchase of a vehicle.”