Vehicle on-the-road costs getting higher: WesBank

Ever-increasing living costs combined with fluctuating fuel prices have been given as some of the reasons many why South Africans are battling to keep their vehicles on the road.

Added to the after-effects of the Covid-19 pandemic still lingering, the current economic issues facing South Africa has seen the upkeep of a vehicle increase by R2 515 since 2018.

In compiling the relative data, WesBank reports that the pinch is unlikely to improve soon based on not only the fuel prices and the economy, but also the stagnation of many people’s salaries plus the expectation of many companies to have its employees back in the office instead of working from home.

Situation not looking good

“It is important to understand what makes up the total monthly cost of vehicle ownership, whether the car is being driven more frequently or not. While fuel consumption might vary accordingly, the fixed monthly payments, such as vehicle finance and insurance costs, are constant expenses that need to be included in the monthly household budget,” WesBank’s head of marketing Lebogang Gaoaketse said.

“If you have selected a linked interest rate in your repayment plan, interest rate fluctuations will also have an impact on the total amount”.

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The rapid uptake has resulted in many consumers deviating from established brands to cheaper offerings simply as a result of the former’s offerings having become too expensive and out of feasible reach, he added.

“This has 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,” Gaoaketse continued.

How much?

In explaining the increase in keeping a vehicle on the road in 2022 compared to 2018, the firm has tabled its latest research based on a vehicle costing an average of R250 000 and driven 2 500 km a month.

The results were as follows:

Out of the findings, vehicle instalment was judged to have been the highest outlet at 42% (R4 313) followed by fuel at 39% (R3 950), insurance at 14% (R1 409) and running costs per month at 5% (R493).

Compared to the same time in 2018, instalments were at 44% or R3 383 of the same basket and fuel at 36% or R2 765.

“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,” Gaoaketse said.

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

“Prospective vehicle owners should take a holistic view when planning a car purchase to ensure they don’t overextend themselves by right sizing the spend to fit their budget. This includes making allowances for increases in costs down the line, such as a higher interest rate or a further increase in the fuel price, as we are currently experiencing in 2022”.

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