Fuel levy increase raises alarm bells across South Africa's automotive industry

MARKET REACTION

- YOGASHEN PILLAY

THE Automotive industry has expressed mixed reactions to the 16 cents per litre increase in the fuel levy announced by Finance Minister Enoch Godongwana in Budget Speech.

The Automobile Association (AA) on Thursday responded to the announcement with apprehension, acknowledging the government's fiscal constraints while highlighting the immediate repercussions this levy increase will have on consumers and the broader economy.

The AA added that this levy adjustment came at a time when South Africans were already contending with high food prices, elevated interest rates, increased electricity tariffs, and persistently high unemployment.

"Fuel is a critical input cost across all sectors of the economy; any increase inevitably drives up transport and operational costs, further intensifying inflation. Lower-income households, which spend a greater share of their income on transport, will be disproportionately affected by this rise," it said.

Adding to the chorus of criticism, Gavin Kelly, CEO of the Road Freight Association (RFA), emphasised that the increase would be felt directly by consumers.