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2017-07-21 15:18

Image: Motorpress

Johannesburg - TransUnion says its latest Vehicle Pricing Index "should be music to the ears of consumers who’ve been itching to buy a new vehicle". 

Its VPI report, examines the link between the year-on-year increase in vehicle pricing for new and used vehicles.

TransUnion’s Q2 2017 report shows that the VPI for new passenger vehicles has decreased from 8.4% in Q2 2016 to 5.4% in Q2 2017, while the VPI for used vehicles increased from 2.7% to 3.6% over the same period. 

Costs on the rise

The overall cost of motoring is still on the rise, despite recent cuts to interest rates and fuel prices, as well as a slowdown in vehicle price inflation, says Wesbank.

Wesbank says its monthly mobility basket – which comprises instalments, fuel, insurance and maintenance fees – has increased 24.2% since July 2013. For July 2017, the Mobility Calculator reflects that the average cost of motoring has risen to R7 119.80. This is 6.1% higher than July 2016, when the monthly mobility basket was R6 709.53. Compared to five years ago, the total cost of motoring is now 24.2% higher. In July 2013, monthly costs amounted to just R5 732.64.

1  Instalments are more affordable

The South African Reserve Bank announced that interest rates would be cut by 25 basis points, a move that will have a positive effect on household budgets. Consumers with vehicle finance, home loans, and credit cards will have more disposable income, as instalments become more affordable.

READ: 'Significant drop' in SA car price inflation - TransUnion

2 Fuel and instalments - your biggest costs

Vehicle instalments and fuel spend remain the biggest portions of its monthly mobility basket. Insurance premiums, vehicle instalments, and maintenance costs all account for the highest increases over the last five years, mainly as a result of vehicle price inflation. From 2013 to 2017, rising interest rates and higher new vehicle prices saw instalments increase 43.8%. Rising vehicle prices also resulted in higher insurance premiums, which grew 38.6% over the same period.

3 New vs Used

The data also indicates that consumers are spending far more on new and used vehicles, influenced by vehicle price inflation. Data from TransUnion suggests that new vehicle price inflation is slowing down, yet the effects of this won’t be seen immediately in vehicle sales figures.

4 Monthly fuel spend has decreased

While instalments, fuel, and maintenance costs have increased consistently, average monthly fuel spend has actually declined over the last two years. When viewed as a portion of the monthly motoring budget, fuel spend only accounts for 31% in July this year. This contrasts with 34% in July 2016, and 39.7% in July 2013.

5 Long term view needed

However, July’s lower fuel prices are forecast to be short-lived. Despite this month’s fuel prices being lower than they were during July last year, stronger oil prices and a weaker Rand mean an increase is on the cards for August.

Fluctuating fuel prices are one of the reasons that consumers should not base their entire motoring budgets on fuel spend. Instead, motorists should take a longer-term view when planning a car purchase, and ensure that their budgets are able to absorb higher maintenance costs and insurance premiums four to five years down the line.

Check out the infographic below: Info by TransUnion

Read more on:    wesbank  |  transunion

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