Rising fuel prices and depreciation speed up cost of motoring

Article date: 2 October 2008

UK motorists are paying on average a fifth (19%) more to keep their cars on the road than in 2007, with the total average cost for owning and running a car now at £6,133, according to RAC's 2008 Cost of Motoring Index, released today. A massive 17%* hike in fuel prices and a 35% rise in depreciation in the past year as economic uncertainty stops consumers making car purchases, have proved the biggest factors behind the drastic rise.

According to the index, the annual running costs** for an average family car have increased to £2,435 - a year-on-year increase of £277. This equates to £47 per week, or 20.3p per mile, and could explain why over a third of drivers (36%) are considering buying a car that is cheaper to run than their current model***.

RAC's Cost of Motoring Index is an in-depth piece of research that tracks the costs associated with owning and running 17 popular models of car each year. The Index is utilised by RAC to uncover the costs associated with owning a car within the UK - and to highlight to motorists where savings can be made.

Despite the spiralling costs, the research points to a continued dependency on cars in the UK, with over two thirds (68%) of motorists saying they would not stop relying on their car unless better public transport is made available. Also, on average drivers would not consider giving up their car until the running costs rose by almost 50%**** beyond their current level. This means the weekly cost of motoring would need to increase to £68.39, over £20 more than the existing price.

The increasing strain on the average family's purse strings is forcing a number of motorists to try and change their behaviour to reduce costs, including:

  • A quarter of motorists (25%) now share their car more with friends and family
  • 16% are considering buying a second hand car rather than a new car to avoid losing money through depreciation
  • A quarter (22%) are considering switching to a smaller car or bike
  • Nearly one in five (18%) are considering changing their car for one in a lower insurance category.

The cost of motoring also looks set to rise further with volatile fuel prices and the uncertain economic climate.

RAC's motoring strategist Adrian Tink, comments: "The Cost of Motoring Index is designed to help cash-strapped motorists by highlighting hidden cost, including depreciation. With the credit crunch hitting motorists hard in their pocket, we encourage UK drivers now more than ever to take all potential financial implications of car running costs into account to better manage their budgets.

"With the majority of UK motorists also admitting that reliance on their cars would only change if we had more effective and cheaper public transport*****, RAC is urging the government to ensure money from motoring taxes is directly invested into improving the current public transport system."

According to the Index, the full costs for running an average car are:

VARIABLE

2007

£

2008

£

Depreciation

2357

3183

Fuel

1129

1322

Cost of Finance

618

510

Insurance

446

483

Maintenance

321

381

Tax

129

118

RAC membership

133

136

Total cost (per year)

5,133

6,133

Total cost (per week)

98.71

117.94


RAC patrol Prakesh Patel warns motorists that attempts to cut back on crucial motoring costs could lead to a false economy: "The Index revealed, worryingly, that a fifth (20%) of motorists are considering avoiding putting their car in for a full service in a bid to save money. Servicing a car regularly not only helps with efficiency and safety, it also prevents the value of a car dropping. RAC recommends that drivers stick to their servicing schedules if they do not want to lose out in the long run."

RAC has compiled the following cost-effective tips to help motorist save money by cutting down on fuel consumption:  

  1. Drive at an appropriate speed to reduce fuel costs: Not only does staying at or within the speed limit increase driver safety, it also saves money on fuel costs and reduces CO2 emissions
  2. Less stopping and starting means less fuel use and lower CO2 emissions: Anticipating traffic flow will reduce fuel consumption
  3. Over-revving accelerates emissions: Modern car engines are designed to be efficient from the moment they are switched on, so revving up like a Formula 1 car in pole position while standing still only wastes fuel (and money) and increases engine wear
  4. Idling is wasting fuel: If you're likely to be at a standstill for more than three minutes, simply switch off the engine
  5. Shop around: Use a fuel comparison website such as www.petrolprices.com/ to find the best priced fuel in your region
  6. Don't get lost: Don't waste fuel by going the wrong way - plan your route before leaving  with RAC Route Planner: www.rac.co.uk/web/routeplanner

-ends-

RAC Press office contact:
Adam Cracknell on 01603 684916 / 07800699517, Jennifer Hardisty on 0207 908 6465 or Amy Funston on 0207 908 6433.

Notes to editors:

* The 17% increase is the actual cost increase having taken a 4% improvement in fuel consumption into account.
** "Daily running costs" comprise day-to-day expenses when running a vehicle, such as fuel and maintenance.
*** Consumer research carried out by Redshift among 1067 motorists in September 2008.
**** According to the research 72% of people would stop driving as a result of cost increases but 28% would not. Those people who would, said they'd be likely to stop once costs increased by an average of 46% beyond their current level.
***** As well as 68% of motorists saying they would consider reducing the reliance on their car if there was better public transport, 68% also said they would do so if transport was cheaper.

The RAC Cost of Motoring Index is based on data provided by Go Motoring, It tracks all the costs associated with owning and running 17 different models of car, from initial purchase to depreciation, the cost of insurance, fuel, servicing, VAT and breakdown cover.

About RAC
With around seven million members, RAC is one of the UK's most progressive motoring organizations, providing services for both private and business motorists.  Whether it's roadside assistance, windscreen repair and replacement, learning to drive, vehicle inspections and checks, legal and financial services or up-to-the-minute traffic and travel information - RAC is able to meet motorists' needs. RAC incorporates BSM, RAC Auto Windscreens, RAC Direct Insurance and HPI.

RAC is committed to providing the very highest levels of service to its members and has been ranked first for customer service by J.D. Power and Associates' UK Roadside Assistance Study for the past two years.

RAC is part of Aviva, the world's fifth largest insurance group which operates in 27 countries.  Aviva bought RAC in May 2005.  The acquisition brings together RAC's powerful brand and customer base with the expertise and leading position in motor insurance of Norwich Union Insurance (part of Aviva). Norwich Union is the UK's largest insurer, insuring one in seven motor vehicles and with a market share of around 15%.

RAC's news releases and a selection of images are available from the internet press centre at www.racnews.co.uk/.

  

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