When will we see light at the end of the tunnel?

ACCORDING TO the National Association of Automobile Manufacturers of SA, 564 000 new vehicles were bought on the South African domestic market last year – 45% of sales of new vehicles for the entire continent.

The next biggest African market was Egypt, with roughly one-third of our new vehicle sales. The new motor industry contributes 7.7% to South Africa’s GDP, which, by the way, has surpassed our famed mining industry.

While buying a new vehicle always fills one with a liberating sense, in recent times fuel costs increasingly put a damper on the whole feeling.

At midnight, fuel prices continued to soar to new record levels. Both grades of petrol, 93 and 95, increased by 99c and R1/litre respectively from midnight. This brings the overall retail price of 95 ULP for motorists in Gauteng to R17.08/l and R16.49/l at the coast. Diesel 0.05% sulphur and diesel 0.005% sulphur rose by R1.24/l, illuminating paraffin climbed R1.39/l and liquefied petroleum gas by R1.79/kg.

The petrol price hike is the biggest single rise in recent memory, and will have a severe impact. The general fuel levy (R3.37) and Road Accident Fund levy (R1.93), built into the prices, do not help matters.

While government mismanagement has played a significant role in where the fuel price is today, much of the increase is due to rand depreciation and the steady international crude oil price. For instance, since September’s fuel adjustment, Brent crude has gone up about 6%. Yesterday afternoon it was trading at around $84.50 a barrel, compared to $74.41 in June. Over the past 12 months the oil price has risen more than 60%.

With US President Donald Trump’s sanctions on Iran – one of our main oil suppliers – the future looks gloomy.

The fuel price hikes could push marginal businesses to financial breaking point, and have a massive negative impact on consumer pricing. With increased transport costs, retailers and other service providers will pass costs on to the beleaguered consumer.

As for motorists, the only options left will be to save petrol costs by adopting strategies such as lift clubs, or to think of clever ways to minimise fuel consumption. The average South African motorist uses 140 litres a month – so you can stretch your tank by not speeding, by driving with windows closed, and making sure your vehicle is regularly serviced.

It promises to be a long, dark tunnel before we see light at the end.