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Everyone needs to live comfortably, and owning a car is just one of the many luxuries that many people hope to achieve in their lifetime. Having your own car makes it easier to travel from home to work or even to go out with friends and family, rather than having to rent a vehicle.
However, with the price of gasoline skyrocketing these days, some people are reconsidering purchasing a car, especially if they can use it during this new normal work-from-home thing.
COVID-19 has altered the way we travel, commute, and transport goods from one location to another. During the peak of the pandemic, gas prices fell to an all-time low, making it affordable for those who rely on it. However, it had little impact on car owners because, while fuel prices fell, many people were unable to travel due to the many restrictions imposed by the pandemic.
Those with the ability of buying cars, however, are unaffected. Car companies are still launching brand new models of their vehicles, implying that there is still a market for people who want to own cars.
Effects of Russia-Ukraine crisis to the oil market
Here’s a scenario to help you understand the recent oil price increase. With crude demand beginning to recover in June 2021, Opec+ began gradually increasing supply, adding 400,000 barrels per day to global markets. It now supplies about 2.5 million fewer barrels of oil per day than it did in spring 2020.
The 13 members of Opec (the Organization of Petroleum Exporting Countries), primarily Middle Eastern and African countries, met in May amid global calls to lower oil prices. However, members of the oil producers’ group Opec+, which includes Russia, are not rushing to assist.
When Russia invaded Ukraine, however, the price of crude skyrocketed to well over $100 per barrel. This has resulted in significant increases in the price of gasoline at the pump. Opec+ maintains good relations with Russia because it is one of the alliance’s two largest partners.
“The Russians are happy with prices at this level,” says Carole Nakhle, CEO of Crystol Energy. “They have nothing to gain in seeing them go lower,” said an excerpt from a BBC news article.
The current market price of gasoline ranges from PHP 73 to PHP 80.50 per liter (USD 1.531 / EUR 1.42).
Based on oil trading from May 30 to June 3, the price of a liter of diesel may rise by PHP 6.30 to PHP 6.60. Meanwhile, gasoline prices may rise by PHP 2.50 to PHP 2.80 per liter.
Impact of oil market rise in the auto industry
According to Investopedia, because gasoline is a petroleum-based product, changes in crude oil prices have a direct impact on automobile sales and prices. When the price of gasoline falls, car owners have more disposable income to spend on other things.
There appears to be no stopping people from purchasing cars in the Philippines, as car manufacturers have recently launched new models. Honda debuted the All-New Honda HR-V, a subcompact crossover with exciting upgrades, in April of this year.
The notable upgrades mark the start of a new chapter for Honda’s subcompact crossover, thanks to its sophisticated styling, premium quality, advanced safety, and intuitive technology that is adaptable to different lifestyles and aims to attract brand new car buyers.
Read more below.
Similarly, Toyota Motor Philippines has introduced the all-new Avanza with family-friendly upgrades. The new Avanza starts at PHP 18,563/month with an estimated loan amount of PHP 831,200.
Buying used or second-hand cars, on the other hand, will be more difficult than buying brand new vehicles, but the rewards can be significant. The most significant benefit is the lower cost. It is significantly less expensive than purchasing a new one. However, keep in mind that you are purchasing a second generation (or possibly third) hand-me-down vehicle, so don’t expect to get a completely scratch-free, running perfect vehicle. When purchasing a used car, keep your expectations to a bare minimum. Caveat emptor, as they say.
There is no doubt that oil prices have an impact on car companies’ profit margins; oil accounts for 97% of transportation fuels used to power vehicles. Oil is also a key component in the manufacture of tires.
However, we continue to see a large number of cars on the roads and highways every day, indicating that there are still a large number of people who, despite rising oil prices every week, do not bother and prefer to drive their own cars.
If you’re wondering how you’ll afford to buy one, there’s a car loan and payment tool that can help you find, calculate payments, and budget your savings so you can buy the right car for you and your family. This tool is useful and works with just about any scenario, new or used car, trade in, no trade in, etc.
You can check out CarPaymentCalculator.net where you can easily find calculation results, ability to calculate car price that fits a monthly payment or loan payment amounts, printable amortization schedules, etc.
One of the site’s tool features can help you compute your car’s Miles Per Gallon and forecast your gasoline expense for one month and for one year. It also allows you to see how much money you would save if you were driving a car that got better gas mileage.
If you’re worried on the interest you’ll be paying for your vehicle, there’s also a tool feature that shows how much your bi-weekly car payments will be and how much interest you will pay on your vehicle. Each year has 52 weeks or 26 biweekly periods in it, which makes shifting from monthly payments to biweekly payments create an effective 13th monthly payment to pay down the loan quicker.
And if you got bored while you’re stuck on traffic or killing time before speeding out on a rush hour, you might find extra entertainment with the games featured on CarPaymentCalculator.net for children and kids at heart!
With all of the current and global events, we hope that we have provided some useful tips if you are looking for a new car, whether brand new or used.
When purchasing a car, you should consider more than just the rise in oil prices. Remember all of the service maintenance costs that must be added to your regular expenses, as well as the tollway fees that must be paid every time you pass through highway tolls. Other things to consider (but that you can do -it-yourself) are car care kits and regular car wash fees.
Just remember to drive safely and to keep your eyes on the road at all times!
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