Zululand Observer - Weekender

Steady rise in cost of motoring

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AUTOMOTIVE financier, Wesbank, says the cost of motoring continues to rise steadily.

The monthly mobility basket, which comprises of vehicle instalment­s, fuel, insurance and maintenanc­e fees, has risen to an average of R7 851.39.

This is 3% higher than last year, and 28% higher than five years ago when monthly costs amounted to R6 144.22.

These costs are reflected by the WesBank Mobility Calculator, a tool that the bank uses to track and calculate motoring expenses.

The total mobility basket comprises all the fees that are involved with vehicle ownership: a monthly instalment, the insurance premium, fuel and maintenanc­e fees.

These expenses are regularly updated to reflect inflation, interest rates and other fluctuatin­g costs, and are based on an average entry-level vehicle that travels approximat­ely 2 500km per month.

Vehicle instalment­s and fuel spend remain the largest portions of the monthly mobility basket, accounting for 80% of monthly mobility spend.

However, when viewed as a portion of the monthly motoring budget, fuel spend is significan­tly less in 2019 compared to five years ago.

Fuel spend accounts for 35% of the total this year, while vehicle instalment­s are 45%.

This contrasts with the mobility basket in 2014, where fuel spend and vehicle instalment­s cost about the same amount.

‘In 2014, fuel prices were on the rise and monthly fuel spend was roughly equal to an entry-level vehicle’s instalment,’ says Ghana Msibi, WesBank Executive Head of Motor.

‘This is no longer the case, and despite monthly fuel price hikes from February to June 2019, this month’s fuel prices are actually lower than they were during July last year.

‘This does not mean the cost of motoring is lower,’ says Msibi.

Interest rate cut

Vehicle instalment­s and insurance premiums account for the highest increases over the past five years, mainly as a result of vehicle price inflation.

From 2014 to 2019, vehicle instalment­s increased by 43%, while insurance premiums grew by 40%.

In comparison, fuel spend and maintenanc­e fees only grew by 11% and 8% respective­ly over the same period.

WesBank’s data indicates favourable vehicle price inflation over the past year, with consumers only spending marginally more on new and used vehicles.

In June, the average new vehicle financed through WesBank cost R321 715, while the average used vehicle cost R215 848.

This reflects only a 3% and 2% yearon-year change for new and used vehicles respective­ly.

However, the interest rate cut will be welcomed by consumers with vehicle and home finance.

‘Interest rate cuts and lower fuel costs are always welcome, but this shouldn’t influence a vehicle purchase,’ says Msibi.

‘Motorists should take a holistic view when planning a car purchase and ensure that their budgets include the instalment amount, insurance costs, fuel money and savings for maintenanc­e and services.

‘Their budgets should also be able to absorb higher costs a few years down the line.

‘The smartest move is to plan for rising costs over the duration of the finance contract.

‘Our mobility calculator is there to help consumers gauge the total costs associated with vehicle ownership,’ concludes Msibi.

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