New car sales are almost back to pre-pandemic levels and in May 2022 passenger car sales were up 13.8% (from 24,119 to 27,437 units) compared to 2021. Prices for second-hand cars are also up: TransUnion’s Vehicle Price Index (which in effect measures the inflation rate of used vehicle prices) increased from 2.9% to 7% year-on-year. South Africans are clearly as keen on their cars as ever, but can they afford to continue driving them?
Fuel prices are also skyrocketing. South Africans are now paying 23% more to fill up than they were in January 2022. And, if you’re nearing the final payment of your five-year car instalment, you’re paying nearly 80% more to fill up your tank today than you did when you bought the car in June 2017, when a litre of 95 unleaded cost R13,54.
Add to that the potential return of the full R1,50/litre fuel levy in August, May’s 50 basis point hike in interest rates, possible further increases in the oil price, the knock-on effects of the war in Ukraine, and the (at least partial) return to office commuting, and motorists may soon have to make tough decisions about their cars.
Your best bet may be to cut the costs you can control – like relooking your car insurance, using a motor warranty to cover unexpected mechanical issues, or opting for scratch and dent cover for minor bumps. South Africa’s big banks and many retailers offer rewards programmes with links to fuel, which are worth considering. But if you can’t beat the rising fuel cost, you could review the operating costs of your vehicle by comparing all the elements that will help you get more mileage out of your vehicle.
Insurance is one of them – and a quick search on insurance comparison platform Hippo.co.za reveals interesting insights into how much money motorists could save.
If you’re a 41-year-old Joburg male*, driving South Africa’s most fuel-efficient car, the new Fiat 500, you could pay between R544 and R803 a month for car insurance. Opting for the most cost-effective provider could save you R3,105 a year. If you’re driving a thirstier car (say a new Nissan Patrol 5.6l V8 Tekna), your monthly insurance premium could range from between R1,802 to R2,489. Switching to a less pricey insurance option could save you R8,243 per year.
In the second-hand car market, the 2021 Suzuki Swift 1.2GA and 2020 Hyundai Grand i10 both typically sell for under R200,000, and are capable and efficient cars. Insuring the former could cost between R749 and R1,098 per month, and the latter R670 to R982. Doing some research in both cases could save you R4,188 or R3,743 a year respectively.
What about a motor warranty? To avoid surprise expenses for a mechanical breakdown (which could result in a single bill for tens of thousands of rands) on a previously owned Fiat 500, you’d pay between R149 and R321 per month for peace of mind. Using the Nissan Patrol V8 as a counterpoint, a motor warranty would start at the same price and rise to R457 per month.
For unexpected bumps and bruises, scratch & dent cover for both of those vehicles would fall into the same price range (R98 to R111), which is a bargain for the driver of the pricier vehicle.
“There are some big savings to be had by comparing your car insurance costs at a time when every motorist is tightening their budget,” says Hippo.co.za CEO, Bradley Du Chenne. “That said, there are also other ways to help cut or offset costs, like carpooling if you can’t work from home.”
* Quote results apply to a 41-year-old single male living in Johannesburg, with a valid South African ‘B’ driver’s licence (first issued 1999), whose vehicle is parked in a security complex both day and night. He has had uninterrupted comprehensive car insurance for seven years, and has not claimed for a car accident or vehicle theft in three.