Zimbabweans Suffer 97% Surge in Vehicle Operating Costs in Two Months

Harare – Zimbabweans suffered a 97% surge in vehicle operating costs over the past two months, a motor industry report confirms. An analysis of the Automobile Association of Zimbabwe’s (AAZ) monthly reports on estimated vehicle operating costs for the period of August to October 2019 by ENN puts to doubt Zimbabwean motorists’ capacity to maintain their vehicles into the future. According to AAZ in its revised October 2019  report, a motorist with a luxury petrol powered vehicle of above 3000cc engine capacity incurs a cost of ZWL$4.82 per kilometre travelled, up from ZWL$2.78 in August 2019. A light petrol powered vehicle of up to 1500cc engine capacity now accrues ZWL$2.31 operating costs per every kilometre travelled, up from ZWL$1.17 in August 2019. According to the AAZ October report, captioned V237, fuel alone now constitutes an estimated 49% of a vehicle’s running costs in Zimbabwe. The chart below shows the consumed by vehicle operating costs per every kilometre travelled for petrol powered vehicles of various engine capacities.

Benchmarking against the above luxury vehicle operating costs, the situation is more disturbing for earthmoving equipment which consumes more fuel and lubricants for mobility; and high cost spares for servicing and maintenance. Mining companies, construction firms and haulage truck operators in Zimbabwe are grappling with these high operating costs on a daily basis, adding to the electricity challenges, which have significantly affected their productivity.

Zimbabwe is enduring an economic crisis which is threatening to collapse industry and commerce.  Economists who examined official data put Zimbabwe’s inflation in September 2019 at 320%, reflecting a nation in hyper-inflation. Energy and foreign currency challenges have worsened the situation as the Zimbabwe government responded to these challenges through effective significant price increases on fuel and electricity. In October 2019 alone, fuel prices have gone up twice, first by 27% on October 5, followed by a 12% increase on October 27 respectively.

Under the assumption that a vehicle travels for 16,000 kilometres per year, AAZ factored in fixed costs of licencing and insurance. They also factored in running costs of fuel, vehicle servicing, sundry repairs and replacements for a calendar year. Below is a chart showing the estimated total vehicle operating costs per year for petrol powered vehicles for different engine capacities.

As shown above, small vehicles of 1500cc engine capacity and below would require ZWL$36,882.50 per year to be fully serviced and fuelled per year. Executive vehicles pf 3001cc engine capacity and above will require ZWL$77,137.50 per annum for fuel, licencing, servicing and maintenance. The above costs are based on an average travel distance of 44 kilometres per day for the entire year.

 Considering the average employee salaries in Zimbabwe which hardly surpass ZWL$3,000 per month, many vehicle owners in Zimbabwe will soon ground their vehicles due to inability to maintain and fuel them. This situation exposes Zimbabwe to road carnages as many motorists will fail to properly maintain their vehicles, ending up driving vehicles which are not roadworthy. Again, these inflationary developments have destroyed Zimbabwe’s middle class through depleting their disposable incomes. In any economy, it is the middle class that is pivotal in driving any meaningful economic growth.

On a national scale, Zimbabwe’s high energy and transport costs make it an expensive business market for potential investors to set up. Companies operating in Zimbabwe today will struggle to carry these vehicle operating costs for their vehicle fleets. Add these challenges to the country’s economic policy inconsistencies: this is why investors are saying Zimbabwe’s economic fundamentals are still out of sync.

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