Data from WesBank shows that the real cost of car ownership in South Africa has risen by 48% since pre-Covid levels, with the average monthly cost of owning your vehicle standing at R11,627 in May 2023, compared to R7,851 in 2019.
Not only have cars rapidly gotten more expensive, but so have fuel, insurance, maintenance and repairs, and everything else associated with them.
The finance house highlighted that a 10th consecutive interest rate hike, which is expected to happen at the end of the month, would harshly impact home and car owners, especially in an economic climate where food, electricity, and living expenses are also on the up, reports BusinessTech.
Runaway monthly costs
To reach the above conclusion, WesBank calculated the monthly ownership cost of the average vehicle purchased on a finance plan, along with the expected fuel, insurance, and maintenance expenses to reach a “total mobility cost” (TMC).
The car in question has a value of R280,000 as this is the average financing amount WesBank receives, and it travels approximately 2,500km per month, said the company.
A breakdown of the TMC over the past four years and five months can be found below:
The data shows that the period between 2019 and 2020 was the only instance in which the TMC actually went down, falling by 3% over this time. From 2020 onwards, the TMC saw three consecutive increases of 2%, 21%, and 16% year on year.
The largest jump took place from 2021 to 2022 as the country emerged from Covid-19 lockdowns and got back on the streets, while at the same time, new and used car stock levels remained constrained which led to rising price tags across the industry.
Similarly, fuel prices reached an all-time high of over R26 per litre in the middle of 2022, putting immense pressure on the budgets of average motorists.
While the supply of new vehicles has since gotten back on the road to recovery, WesBank doesn’t expect any slowdown in current price trends in the near future.
In the same vein, prices at the pumps may have come down ever so slightly in relation to mid-2022, now sitting around R23 per litre, but as economic activity is higher than before and more people have returned to the office, the average monthly fuel cost is still more daunting than what it was the year before.
This has culminated in a dramatic increase of 48% in the cost of car ownership since before the Covid-19 pandemic.
With the TMC now at R11,627.76, it accounts for approximately 45% of the average person’s salary which at the start of 2023 stood at R26,032, according to Stats SA.
The graph below shows the trends for the different input factors of the TMC since 2019:
Keyword: Real cost of car ownership in South Africa climbs 48% in 4 years