2014 a year of misery for motorists

Industry news

Johannesburg - The beginning of the new year is going to hit motorists in the place they least like it, the pocket.

Still reeling from the controversial introduction of expensive e-tolls on Gauteng freeways in December and the huge effect it has on travelling costs in the province, road users countrywide are also being hit with major car-price increases and an expected fuel hike.

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A customer fuels her car with unleaded petrol at a Morrisons supermarket in Coalville, central England, October 15, 2008. Supermarket chain Morrisons have cut the price of petrol on their forecourts to below £1 ($1.744) for the first time since December last year.   REUTERS/Darren Staples   (BRITAIN)The price of the cheapest car on the South African market, the Chery QQ3 0.8 TE, has gone up by nine percent in the past year.

According to TransUnion’s latest Vehicle Pricing Index released last week, new-car prices rose by a substantial 5.65 percent in the fourth quarter of 2013 - the highest level since March 2010 - which was followed by another general price increase across most brands in January 2014.

South Africa’s cheapest car is the Chinese-built Chery QQ3 0.8 TE, selling for R86 900, which is a nine percent jump over the R79 900 it cost in January 2013. SA’s best-selling car, the Polo Vivo, went up by about seven percent in the past year, and there was a similar trend amongst entry-level cars such as the Toyota Aygo, Kia Picanto and Ford Figo, which had increases of 7-9 percent.

Medium-sized cars such as the Toyota Corolla (3-4 percent increase) and Ford Focus (4-5 percent) fared a little better over the past year.

Worse news is that new vehicles are dragging used-car values up with them.

Although pre-owned cars are still depreciating in value it’s occurring at a decreased rate, with used-vehicle deflation in the last quarter of 2013 slowing to 1.72 percent from 3.09 percent.

TransUnion cites the biggest culprit as the rand, which dipped to a four-year-low in May when it broke through the R10 to the dollar mark, seriously affecting the cost of imports, with the trend continuing into 2014 with the rand passing R11 to the dollar this week.

Despite the ongoing rise in new car inflation, the ratio of used to new vehicles sold continued to move in favour of new cars from 1.70 in the second quarter of 2013 to 1.66 in the third and 1.60 in the final quarter of the year.

“The new market is being supported by manufacturers’ incentives and trade-in assistance.”

A TransUnion spokesman said: “Given the increasing price of new cars, this trend is unlikely to continue for much longer.

“The question remains how long manufacturers can continue this intervention in the face of ongoing pressure on the rand.”

On the fuel price front, data from the Central Energy Fund is indicating big price hikes for February.

The current price of 93 unleaded is R13.36 inland and R13.16 at the coast; 95 unleaded is R13.57 (inland) and R13.20 (coast), while the wholesale diesel price (price may vary between retailers) for 500ppm is R12.87 (inland) and R12.61 (coast).

The AA predicts petrol could rise by 28-32 cents per litre, and diesel 15 cents.

The AA’s Graeme Scala said: “After remaining fairly flat throughout December, the exchange rate has deteriorated from a South African perspective.

“The rand has now passed the R11 to the US dollar mark and, although international petroleum prices have declined over the same period, the drop has not been enough to offset the increased exchange rate”.

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