JOHANNESBURG, South Africa – The July 2019 interest rate cut and drop in the petrol price was good news for consumers but nevertheless the cost of motoring continues to rise.
The average monthly mobility basket – monthly finance payments, fuel, insurance, maintenance – has risen to R7851.39.- three percent more than July 2018 but a whopping 28% more than five years earlier R6 144.22.
These costs are reflected by the WesBank Mobility Calculator, a tool that bank uses to track and calculate motoring expenses which are regularly updated to reflect inflation, interest rates, and other fluctuating costs and are based on an average entry-level vehicle that clocks about 2500km a month.
Vehicle instalments and fuel remain the largest portions of monthly mobility – 80%. However, when viewed as a portion of the monthly motoring budget, fuel spend is significantly less in 2019 than five years earlier.
Fuel spend accounts for 35% of the total this year while vehicle instalments are 45%. This contrasts with the mobility basket in 2014, where fuel spend and vehicle instalments were about the same.
Ghana Msibi, WesBank’s motor specialist, explained: ““In 2014 fuel prices were rising and monthly fuel spend was roughly equal to an entry-level vehicle’s instalment. A month’s fuel prices are actually lower than they were during July 2018 – but this doesn’t mean the cost of motoring is lower.”
Vehicle instalments and insurance premiums have caused the highest increases over the past five years, mainly as a result of vehicle price inflation. From 2014-19 vehicle instalments increased by 43%, insurance premiums by 40%.
”By comparison, fuel spend and maintenance fees grew only 11% and 8% respectively over the same period.”
WesBank’s data indicates favourable vehicle price inflation over the past year, with consumers only spending marginally more on new and used vehicles. In June 2019 the average new vehicle financed through WesBank cost R321 715, the average used vehicle R215 848.
”This is only a three and two percent year-on-year change for new and used vehicles respectively. However, the recent interest rate cut will be welcomed by consumers with vehicle and home finance.
“Interest rate cuts and lower fuel costs are always welcome, but this shouldn’t influence a vehicle purchase. People should take a holistic view when planning a car purchase and ensure that their budgets include the instalment amount, insurance costs, fuel money and savings for maintenance and services.
”Their budgets should also be able to absorb higher costs a few years down the line. The smartest move is to plan for rising costs over the duration of the finance contract. Our mobility calculator is there to help consumers gauge the total costs associated with vehicle ownership.”