The monthly cost of car ownership in South Africa has seen a dramatic increase of over R3,777 since 2019, while the average take-home pay has dropped by R813 over the same time.
The monthly total mobility cost (TMC) of owning a car in May 2023 sat at R11,628, an increase of 48% over pre-Covid 2019 when it averaged R7,851, data from WesBank revealed.
The TMC includes the price of a finance instalment, fuel, insurance, and repair/maintenance costs per month. It has been calculated for a car like the popular Toyota Starlet that costs around R280,000, the average amount financed at WesBank, and travels 2,500km per month at May’s fuel prices of R23.34/litre.
The take-home pay – the amount the average person takes home after deductions like taxes and benefits – did not rise in accordance with the TMC, coming in at R14,457 in May 2023, a drop of 3% compared to May 2019 when it was R15,270, according to BankservAfrica’s Index.
This means that the cost of owning a car accounted for around 51% of the average South African’s salary in 2019 but in 2023 consumes approximately 80%, leaving a balance of R2,829 for other expenses such as rent, electricity, and food.
If we adjust the take-home pay from four years ago for inflation it reveals an even more stark reality in the rising unaffordability of new vehicles.
Accounting for inflation at an average rate of 6.6% a year, the R15,270 from 2019 would be worth R18,493 today and the current TMC would be a less severe 63% of this, which is still high considering it should be around 20%, but not as unaffordable as the real ratio of 80%.
TMC in South Africa 2019 to 2023. Source: WesBank
Pushing the trend
The imbalance between the TMC and average salary underscores new trends taking shape among households in South Africa.
Many are now holding on to their cars for longer as they can’t afford to upgrade, and they are skimping on things such as maintenance and insurance to use the money for other necessities.
Some families have also sold their vehicles to become one-car households, and others have downgraded to more affordable models with lower running costs.
“If you can’t pay for bread and milk and your bond, you’re going to start skimping on your [vehicle] maintenance, you might be looking for cheaper options, or skipping doing your annual maintenance altogether,” said Kate Elliott, CEO of Right to Repair, in an interview on Cape Talk.
The national auto parc is also ageing and the average age of a vehicle now sits at around nine years.
Unfortunately, as cash-strapped motorists skimp on necessary maintenance and repairs, they may find themselves facing more serious issues down the line that are more expensive to fix, putting them into deeper financial trouble than they could have been.
Additionally, an unkept vehicle puts the owner in more danger as, for example, things such as smooth tyres and worn suspension reduce a car’s stopping and road-holding abilities.
Keyword: Cost of car ownership takes up 80% of the average South African’s salary