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The Cost of Motoring - 2003

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The Cost of Motoring - 2003

    March 2006

THE COST OF MOTORING - 2006

How much does it cost to run a car?

    Facts on the cost of running a car are an essential resource. They are:

    ; important to millions of drivers’ individual decisions on what type of car

    to run

    ; important to public discussion when the Chancellor sets motoring tax rates

    and

    ; key to planning and forecasting transport needs and analysing the various

    social and environmental impacts of vehicle use.

    These motoring cost tables are produced by the AA Motoring Trust and have become a standard reference. When they were first published in 1950, the Road Fund Licence (car tax) was ?10 and a litre of petrol was 3.3p. However, care is needed with comparisons:

    ; the modern car is much more economical and a lot safer

    ; it produces only one or two percent of the toxic emissions of earlier cars

    ; it is quieter, easier to drive, more durable and much more reliable and

    ; it carries features that in 1950 would have been literally incredible.

    The current figures give a guide as to how much it is likely to cost the average private user to run a petrol or diesel powered car, based on buying a car new and replacing it after four years.

    Each year the AA Trust takes 60 top-selling models, representative of the UK market, and analyses their costs over this period. Individual circumstances will vary. For instance, fuel consumption will depend on the particular vehicle type and local traffic conditions, and the expense of repairs needed can be very unpredictable. However, the guide aims to show a representative cost that reflects all the important items to enable motorists to see how it all adds up.

Standing Charges

    The standing charges are those incurred just by keeping the vehicle ready for use on the road. They include road tax (annual vehicle excise duty - VED), insurance, cost of capital used, loss of value (depreciation), and annual roadside breakdown cover. Depreciation is usually the biggest single cost factor, though it is easy to lose sight of it as a day-to-day expense.

The AA Motoring Trust www.AAtrust.com page 1 of 8

    The standing charge will be an annual sum that needs to be provided for, even if the car is not used. This charge can be shown as a ‘cost per mile’ figure by dividing it by the annual mileage covered. The tables (attached below) show these for between 5,000 and 30,000 miles per year with the result adjusted to allow for the different depreciation brought about by the particular annual mileage.

Running Costs

Running costs are those that depend directly on using the vehicle primarily fuel,

    but also include parking and tolls, tyres, servicing and repair costs. On average, every mile run adds this cost to the annual bill, and every mile saved reduces it by the same amount.

Vehicle Groups

    Cars are put into groups depending on the new car price. This is a better guide to the cost of running a car than, for instance, its engine size. Calculations are made by taking the new car list price when first registered, including the main options (eg, automatic gearbox, air conditioning etc) supplied with the car. If in doubt, used car price-guides will give original list prices.

    As the cars analysed for the report were the popular sellers, most do not yet feature in the very low CO emitting categories (CO VED labelling bands A or B). 22

    Vehicles in these bands will be included as they increase their market share.

    This year the AA Trust has produced running costs for an average of six of the best-selling SUV (or 4x4) vehicles (for petrol and diesel engines). Their costs are included in this report, but show little variation from the typical costs within the ?20k to ?30k band.

Claiming Mileage

    How much employers pay for mileage is a matter for negotiation between them and the employees, as circumstances will vary. HM Revenue and Customs operates the Approved Mileage Allowance Payment (AMAP) system details from your local

    tax office or from the HM Revenue and Customs web site:

www.hmrc.gov.uk/mileage/index.htm (using your own vehicle for work)

    www.hmrc.gov.uk/cars/fuel_company_cars.htm (company cars)

VAT

The figures given in the attached tables are VAT inclusive.

The AA Website

The Motoring Costs tables are also on the AA website at www.theaa.com

     The AA Motoring Trust www.AAtrust.com page 2 of 8

Notes to Motoring Costs 2006 tables:

    A Road Tax. Cars registered on or after 1 March 2001 have a rate of vehicle

    excise duty (VED) set according to their fuel type and their emissions of

    carbon dioxide (CO) in the legislated Type Approval tests. Older cars will 2

    have one of two rates: cars with an engine capacity of less than 1549cc, and a

    higher rate for engines above this size. In the tables, the average for each

    price group is used to produce the VED rate shown.

    B Insurance. This is the UK average cost for a good, comprehensive policy,

    with a 60 per cent no claims discount.

    C Cost of capital. This sum represents the loss of income due to the owner

    having money tied up in a vehicle, which otherwise could be earning interest

    in a deposit account. This is currently calculated at 4.5 per cent of the

    average value for the cars chosen for each cost group. Any charges for a loan

    or hire-purchase finance will be extra to this.

    D Depreciation. Cars will lose value at different rates, depending on their

    make, age, mileage and condition etc. The tables assume that depreciation

    costs are averaged over four years from purchase, and include typical

    adjustments for the different annual mileages in that period. Older cars will,

    in general, depreciate at a slower rate than they did when they were new.

    E Breakdown cover allows for AA ‘Option 100’ single membership at current

    rates.

    F Fuel cost is based on the average UK price at the time of publication, but can

    be adjusted, as required, using the factors given. The fuel consumption

    figures taken are typical for each of the car groups listed.

    G Tyre prices may vary throughout the country and according to brand, but

    these are average costs based on a tyre life of 20,000 miles.

    H Labour costs cover normal servicing and parts replacement at a dealer,

    taking average UK labour rates for each of the car cost groups.

    I Replacement parts included cover those likely to be needed under normal

    driving conditions, such as brake materials, oils, filters, bulbs, wipers and

    hoses.

    J Running costs include an allowance for parking and road tolls, based on a

    national average for an urban driver. However, the sums actually paid will

    vary substantially according to individual patterns of use.

    For more information on running costs, including tailored calculations

    for specific new car models visit: www.theaa.com

     The AA Motoring Trust www.AAtrust.com page 3 of 8

    Motoring Costs 2006

    Petrol Cars

     Purchase price of the car when new:

    ?10,000 ?13,000 ?20,000

     Up to to to to Over See

    Standing charges per

    year, ? ?10,000 ?13,000 ?20,000 ?30,000 ?30,000 note:

    A Road Tax 100 125 150 190 190 B Insurance 362 457 541 717 880 C Cost of capital 270 375 467 766 1183 D Depreciation 1161 1611 2343 3266 5178 E Breakdown cover 40 40 40 40 40

    Standing charges only: ? 1933 2608 3541 4979 7471

    Standing charges as pence per mile

     at 5,000 miles per year 38.20 51.52 69.88 98.27 147.35

     at 10,000 19.33 26.08 35.41 49.79 74.71

     at 15,000 13.20 17.82 24.23 34.06 51.19

     at 20,000 10.25 13.85 18.88 26.53 39.94

     at 25,000 8.29 11.21 15.29 21.48 32.37

     at 30,000 6.95 9.39 12.82 18.01 27.15

    Running costs, pence per mile F Petrol * 8.80 10.09 11.18 14.77 17.24 G Tyres 1.00 1.20 1.40 1.80 2.60

    2.46 2.88 3.98 4.60 5.09 H Service labour costs

    I Replacement parts 1.23 1.46 1.70 1.93 2.21 J Parking and tolls 1.80 1.80 1.80 1.80 1.80

    Running costs only: p. 15.29 17.42 20.06 24.90 28.93

     * NB: Petrol at 91.0 pence per litre

    For each penny more or

     less,

     add or take away: 0.10 0.11 0.12 0.16 0.19

    Total of standing and running costs

    as pence per mile

     at 5,000 miles per year 53.49 68.94 89.94 123.18 176.28

     at 10,000 34.62 43.50 55.47 74.69 103.64

     at 15,000 28.49 35.24 44.29 58.97 80.12

     at 20,000 25.54 31.27 38.93 51.43 68.88

     at 25,000 23.58 28.63 35.34 46.39 61.30

     at 30,000 22.24 26.82 32.87 42.92 56.08

     Please see the associated notes for more detail. These figures are typical but do not represent

     all types of vehicle and conditions of use. Once compiled, some of the variables may change

     at any time.

     The AA Motoring Trust www.AAtrust.com page 4 of 8

    Motoring Costs 2006

    Diesel Cars

     Purchase price of the car when new:

    ?10,000 ?13,000 ?20,000

     Up to to to to Over See

    Standing charges per

    year, ? ?10,000 ?13,000 ?20,000 ?30,000 ?30,000 note:

    A Road Tax 110 110 135 160 195 B Insurance 362 457 541 717 880 C Cost of capital 291 358 519 817 1229 D Depreciation 1276 1568 2457 3022 4195 E Breakdown cover 40 40 40 40 40

    Standing charges only: ? 2079 2533 3692 4756 6539

    Standing charges as pence per mile

     at 5,000 miles per year 41.07 50.03 72.86 93.91 129.10

     at 10,000 20.79 25.33 36.92 47.56 65.39

     at 15,000 14.20 17.30 25.27 32.51 44.71

     at 20,000 11.03 13.45 19.69 25.29 34.79

     at 25,000 8.93 10.88 15.95 20.47 28.17

     at 30,000 7.48 9.12 13.37 17.16 23.61

    Running costs, pence per mile F Diesel Fuel * 7.45 7.85 8.81 10.80 13.93 G Tyres 1.00 1.20 1.40 1.80 2.60

    2.46 2.88 3.98 4.60 5.09 H Service labour costs

    I Replacement parts 1.23 1.46 1.70 1.93 2.21 J Parking and tolls 1.80 1.80 1.80 1.80 1.80

    Running costs only: p. 13.94 15.19 17.69 20.93 25.63

     * NB: Diesel fuel at 95.0 pence per litre

    For each penny more or

     less,

     add or take away: 0.08 0.08 0.09 0.11 0.15

    Total of standing and running costs

    as pence per mile

     at 5,000 miles per year 55.01 65.22 90.55 114.84 154.73

     at 10,000 34.73 40.52 54.61 68.49 91.02

     at 15,000 28.14 32.49 42.96 53.44 70.34

     at 20,000 24.97 28.64 37.38 46.22 60.42

     at 25,000 22.87 26.07 33.64 41.40 53.80

     at 30,000 21.42 24.31 31.06 38.09 49.24

     Please see the associated notes for more detail. These figures are typical but do not represent

     all types of vehicle and conditions of use. Once compiled, some of the variables may change

     at any time.

     The AA Motoring Trust www.AAtrust.com page 5 of 8

    Motoring Costs 2006

     Costs for SUVs (Sport Utility Vehicle)

    Petrol Diesel See

    Standing charges per

    year, ? note:

     A Road Tax 190 195

     B Insurance 880 880

     C Cost of capital 754 886

     D Depreciation 2717 3017

     E Breakdown cover 40 40

    Standing charges only: ? 4581 5018

    Standing charges as pence per mile

     at 5,000 miles per year 90.53 99.15

     at 10,000 45.81 50.18

     at 15,000 31.26 34.26

     at 20,000 24.26 26.60

     at 25,000 19.63 21.52

     at 30,000 16.45 18.03

    Running costs, pence per mile

     F Fuel * 16.48 13.67

     G Tyres 2.60 2.60

     H Service labour costs 5.09 5.09

     I Replacement parts 2.21 2.21

     J Parking and tolls 1.80 1.80

    Running costs only: p. 28.18 25.37

    Diesel

     * NB: Petrol at 91.0 pence per litre at: 95 p/litre

    For each penny more or

     less,

     add or take away: 0.18 0.14

    Total of standing and running costs

    as pence per mile

     at 5,000 miles per year 118.71 124.52

     at 10,000 73.99 75.55

     at 15,000 59.45 59.62

     at 20,000 52.45 51.97

     at 25,000 47.81 46.89

     at 30,000 44.63 43.40 The AA Motoring Trust www.AAtrust.com page 6 of 8

    HOW TO CUT MOTORING COSTS

     AA Trust advice Standing

    charges

    Road tax Buy the most CO-efficient (uses least petrol/diesel) car in your 2

    price range to reduce road tax

    For cars registered since March 2001, road tax is less if the car

    produces lower volumes of CO www.vcacarfueldata.org.uk 2

    Environmental labelling of new cars from summer 2005

    http://www.vcacarfueldata.org.uk/green-label/index.asp will make it

    easier to choose 'greener' (lower CO band) models 2

    Depreciation The largest motoring cost. Different makes and models lose value

    at varying rates. Look in good car-price guides for the lowest

    depreciation rates for cars in your price range. How much money

    you lose depends on:

    How much you spend - eg, if two cars cost ?40,000 and ?20,000

    respectively and they depreciate by, say, 50 per cent after three years,

    the owner of the ?40,000 car loses ?10,000 more than the owner of the

    ?20,000 car

    The rate of depreciation - this can differ greatly among models in the

    same price band (Car Buyer's Guide on www.theaa.com projects

    depreciation rates for most new models and, depending on mileage,

    estimates what they will be worth over one to five years)

    How long you keep a car - some cars depreciate by up to 40 per cent

    in the first year; the longer you keep a vehicle the less you lose in

    value per mile

    How many miles you drive high mileage usually equals greater

    depreciation

    You can tie up less capital by buying a smaller, ‘greener’ car Cost of

    capital

    Insurance Smaller, more economical cars usually attract lower insurance

    premiums

    Shop around for quality cover. Consider putting money aside

    throughout the year to meet annual bills

    Breakdown Shop around for quality cover that will give reliable service at the cover roadside. There may be a price difference between quality and basic

    cover, but it represents a very small element of overall motoring costs

     The AA Motoring Trust www.AAtrust.com page 7 of 8

    Running costs AA Trust advice

    Fuel The second biggest motoring cost. Buy the most CO-efficient (uses 2

    least petrol/diesel) car that meets your requirements in your price range

    Drive smoothly driving hard can increase fuel consumption by a third

    Don’t exceed speed limits regularly exceeding the speed limit (eg

    80mph instead of 70mph on a motorway) can add up to 30 per cent to fuel bills

    Carrying an empty roof rack can add 10 per cent to fuel bills

    Low tyre pressures, open windows, air-conditioning, harsh

    acceleration, inappropriate gear changes and excessive loads all increase fuel consumption

    Plan journeys carefully much fuel is wasted by motorists who either get lost or do not take the best route to their destination

    Check traffic reports before and during journeys

    Track the cheapest fuel prices in your area and remember that fuel on motorway service areas can be more expensive

    Do not put off servicing, as economy and your safety could suffer Service and

    labour costs

    Under EU rules you do not have to get your new car serviced by a

    franchised dealer. However, there are benefits in doing so. Dealers’ stamps on service schedules may add to the car’s value and may increase the likelihood of goodwill for payment for work needed outside the warranty period. If you choose to have your car serviced

    elsewhere, ensure that the garage is competent; that it does work exactly to vehicle’s service schedule; and that it uses only manufacturer-approved parts. Keep receipts for parts used, in case proof of their use is needed later

    Consider saving monthly for annual service bills

    Tyres Bigger tyres and exotic looking low-profiles can be expensive a

    smaller, ‘greener’ car will use cheaper tyres

    Low rolling resistance tyres may be more expensive at the outset but significantly improve overall fuel economy

    Shop around for safe, quality tyres but avoid part-worn tyres

    Parking/tolls Check whether public transport is better value or more convenient for each journey

     The AA Motoring Trust www.AAtrust.com page 8 of 8

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