FUEL COSTS: Monthly Fuel Costs Impacting Consumers
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WesBank’s Monthly Mobility Calculator takes into consideration the average cost of ownership to operate a vehicle on South African roads, including the monthly finance instalment, the cost of fuel to operate the vehicle, insurance, maintenance, and – for Gauteng motorists – the cost of e-tolls. The calculator has tracked the mobility basket since 2007.
“It’s vital for consumers to consider the overall budget of operating their vehicle of choice when considering what to buy,” says Chris de Kock, CEO of leading asset-based financial solutions provider WesBank. “Affordability is not driven simply by the price of the car, but more by the total cost of ownership. The WesBank Monthly Mobility Calculator helps motorists understand the full picture.”
Since 2007, the contribution of the actual finance instalment on the vehicle has trended downwards significantly, while the cost of fuel has taken more and more share of the total basket. In 2007, the instalment accounted for 53.3% of the mobility budget and the cost of fuel just 27.8%.
Insurance and maintenance portions of the budget have remained relatively stable over the past six years. The consideration of the cost of e-tolls for Gauteng motorists has also impacted mobility budgets as a cost not encountered before.
“Affordability remains the single biggest consideration affecting vehicle sales, whether new or pre-owned,” says De Kock. “We can see from WesBank’s book how the flexibility of contract structures are being managed to address the affordability of the monthly instalment as extenuating costs impact outright affordability. In 2007, the average contract period over which finance transactions were concluded was 56 months. This has since increased to 68 months, indicating that customers are opting for longer contracts in order to manage the affordability of the monthly instalments.”
The 0.5% interest rate hike last week – the first since 2009 – will also impact consumer confidence. “The cost of finance is the single element of your mobility budget that you have some control over when purchasing your vehicle of choice. While the interest rate increase has creeped up slightly, rates remain at historical lows and new car buyers should consider capitalising by fixing rates,” says De Kock.
When considering your new vehicle purchase, also consider its fuel efficiency versus the average amount of monthly mileage you travel, as this will have a significant impact on your mobility budget.
“The same vehicle scenario cost has increased 52.3% since 2007, indicating just how important it is to consider the longer term impacts of your purchase decision,” says De Kock. “Consumers should consider all the factors impacting their ultimate mobility budget and take control where they can.
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