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Financial|Maintenance
Financial|Maintenance
financial|maintenance

Vehicle ownership costs rising steeply and rapidly – WesBank

24th May 2023

By: Irma Venter

Creamer Media Senior Deputy Editor

     

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Vehicle owners are, on average, paying R3 776 more a month to keep their vehicles running than in May 2019, says WesBank.

WesBank says consumers’ budgets are strained and “under pressure in all departments”. 

“The first four months of this year have already brought two interest rate hikes, with a possible third increase expected at the next Monetary Policy meeting.

“These, together with an escalation in food and fuel prices, load-shedding, unemployment and higher consumer inflation, are severely impacting many household budgets.”

WesBank says it calculated the total cost of vehicle ownership on the basis of an average vehicle priced at around R280 000, traveling plus-minus 2 500 km a month.

The monthly cost basket comprises of instalments, fuel, insurance and maintenance.

Using these parameters, the average cost had increased to R11 628 a month in May this year, up from R10 165 in November, last year, with the biggest increases in monthly repayments being  ongoing interest rate hikes and rising insurance costs. 

While this trajectory reflects a percentage increase of 14% for the period November to May, the May average figure is 48% higher than the same month in 2019, when the monthly mobility cost averaged R7 851.

In May 2023, vehicle instalments and fuel spend remain the most significant portions of the basket, accounting for 81% of monthly spend. 

Fuel spend accounts for 35% of the total, with vehicle instalments at 46%, boosted by the recent interest rate hikes. 

The monthly insurance cost of R1 740 makes up 15% of the total, with monthly running costs accounting for the final 4%, at R493.

“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, thus, intended as a guideline only,” says WesBank marketing and communication head Lebogang Gaoaketse.

“Prospective vehicle owners should take a holistic view when planning a car purchase by rightsizing their spend to fit their budget, in order to ensure that they don’t overextend themselves,” he adds.

“This includes making allowances for increased costs down the line, such as another interest rate hike or higher fuel prices. 

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

 

Edited by Creamer Media Reporter

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