Can you afford your dream car if petrol prices hit R30-R40/litre this year?
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With global inflation and the war in Ukraine stoking higher oil prices, South Africans are facing record fuel prices. Though it’s hard to know where it will end, some analysts say that a petrol price of R40 per litre is not inconceivable in an extreme scenario. Given that fuel is one of the biggest running expenses for your motor vehicle, drivers should consider fuel efficiency and costs when deciding which car to buy or even whether to retain their existing vehicle, says Ernest North, co-founder of the fully digital Naked Insurance platform.
“With the South African Reserve Bank expected to raise interest rates several times during the year and fuel prices on the rise, people should be thinking carefully about how this will affect the affordability of the car they’d like to buy,” says North. “As a simple example, if you drive a car with a fuel efficiency of around 20 kilometres to a litre and drive an average of 1000 kilometres per month, your petrol cost will rise from R2,160 per month to R2,500 if the petrol price hits R25. We encourage car owners to consider their unique scenario of car ownership cost, based on their actual car financing and monthly travel details.”
“With the South African Reserve Bank expected to raise interest rates several times during the year and fuel prices on the rise, people should be thinking carefully about how this will affect the affordability of the car they’d like to buy,” says North. “As a simple example, if you drive a car with a fuel efficiency of around 20 kilometres to a litre and drive an average of 1000 kilometres per month, your petrol cost will rise from R2,160 per month to R2,500 if the petrol price hits R25. We encourage car owners to consider their unique scenario of car ownership cost, based on their actual car financing and monthly travel details.”
