This is how much it really costs to keep your car on the road

Consumers do not often think about how much it really costs to keep their cars on the road and only consider how much they pay for their vehicle finance every month. However, the cost of owning, maintaining and keeping a vehicle on the road is an ongoing issue.

The automotive industry is still feeling the lasting effects of the pandemic and the downturn in the economy, ongoing rising interest rates and increases in the fuel price and spare parts, including tyres, affected the production costs and sales of new and used cars.

Although the country slowly returned to some kind of normalcy last year, the trend now is that people hold on to their current cars for longer, but while this might be a saving in one area, the costs to maintain the vehicle and keep it in running condition could add up.

In addition, with many businesses and organisations reopening and expecting their employees to return to the workplace, more people will have to use their vehicles more often than in the past two years, which will increase cost of the wear and tear.

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Fuel costs for your car

Consumers have to handle fluctuating fuel prices that often hit record levels in part due to the war in Ukraine, as well as fluctuations in the currency and a series of interest rate hikes. Being back on the road now means we have to manage the actual costs of total vehicle ownership and you must factor this into your already constrained budget.

“Therefore, it is important to understand what makes up the total monthly cost of vehicle ownership, whether you drive frequently or not. While fuel consumption might vary accordingly, the fixed monthly payments, such as vehicle finance and insurance costs, are constant expenses that must be included in your monthly household budget,” says Lebogang Gaoaketse, WesBank’s head of marketing and communication.

In addition, if you selected a linked-interest rate in your repayment plan, interest rate fluctuations will also have an impact on the total amount. All these costs resulted in vehicle owners considering affordability as important when they buy a car.

“This resulted in the introduction of new brands focused on more affordable models, together with new entry-level options from established brands. These options enable customers to tackle affordability at a lower price point to lower their monthly expenses, without sacrificing the benefits of owning a new vehicle.”

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Total cost of ownership for your car

Looking at the total cost of ownership for the past five years from 2018 to November 2022 in the table below, you can see that a vehicle owner paid on average R2 515 more per month in November 2022 than in 2018 for the total mobility costs.

(It is important to note that this monthly total cost of vehicle ownership table is based on data that constantly shifts in relation to market activity and is thus intended as a guideline only.)

The table above was compiled using costs for an average entry-level vehicle that costs approximately R250 000 and travels approximately 2 500 kilometres per month. The monthly cost of the vehicle ownership basket, comprising of instalments, fuel, insurance and maintenance costs, increased to R10 165 in November 2022, from R7 716 in 2021, mostly due to the increase in fuel costs and ongoing interest rate hikes.

Gaoaketse says while this reflects a percentage increase of 32% year on year (November 2022 compared to 2021), the November 2022 average figure is also 33% higher than five years ago, when the monthly cost averaged R7 650 in 2018.

In 2022, vehicle instalments and fuel spend remained the largest portions of the basket, accounting for 81% of the monthly spend. Fuel spend accounts for 39% of the total, with the vehicle instalment cost at 42%.

“The figure to November 2022 indicates that the average monthly fuel spend, at R3 950, is almost on par with the vehicle instalment rate at R4 313. The monthly insurance cost of R1 409 makes up 14% of the cost, with running costs per month accounting for the final 5% at R493.”

According to Gaoaketse this varies quite substantially compared to the mobility basket in 2018, where fuel spend accounted for only 36% of the total of R2 765 while the average vehicle instalment was 44% at R3 383.

“A similar pattern emerged over the past four years, but last year indicates that fuel spend and vehicle instalment costs have a similar weighting, with each accounting for approximately 40% of the total, an indication of the massive fuel price and interest rate increases motorists were subjected to.”

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Impact of global and local influences

He says the figures up to November 2022 are also further evidence of the wide-reaching impact of global and local influences on the total cost of vehicle ownership.

These costs are reflected in the WesBank Mobility Calculator, a tool that tracks and calculates motoring expenses. The total basket of costs consists of all the fees associated with vehicle ownership: the monthly instalment, comprehensive insurance premium, fuel and maintenance fees. These expenses are also updated regularly to reflect current inflation and interest rates, the rising petrol price and other fluctuating costs.

Gaoaketse says it is important to remember that the monthly vehicle ownership basket figure is based on data that constantly shifts in relation to market activity and is therefore intended as a guideline only.

“The economic impact of Covid-19 created an anomaly in relation to the 2019 data and should also be taken into consideration when comparing the 2022 figure to 2020 and 2021. As a result of vehicle price inflation over the past year and other industry constraints, consumers have spent more on average for new and used vehicles in 2022 and this trend is likely to continue into 2023.”

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Average value of new vehicle

In October last year, the average value of a new vehicle financed through WesBank was R388 338 compared to R368 696 in October 2021, reflecting a 5% year on year average price increase for new vehicles.

Gaoaketse says prospective vehicle owners must take a holistic view when planning to buy a car to ensure they do not overextend themselves by right sizing the spend to fit their budget, including making allowances for increases in costs down the line, such as a higher interest rate or a further increase in the fuel price.

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