RAC

3.0 Motorists and Money

car in petrol station

Money still remains the number one concern for motorists with an ever increasing proportion of their weekly spend being eaten up by transport costs whether they are driving or using other modes of transport. But is the financial burden equal across all motorists and what are they giving up to balance the books?

3.1 The cost of motoring

The price of petrol rose 23% and the price of diesel 28% over the last two years. Overall, the cost of motoring soared by 14% in 2011 – bringing it up to an average of £6,689 – or 55.7p per mile to own and run a car.

Petrol pumpSo how do these increases affect motorists’ views on the cost of motoring? More than half don’t know what percentage of their income they spend on motoring and cannot estimate whether it is more or less than five years ago or even 12 months ago. Those that think they know, estimate that they spent an average 13.6% of their income on motoring five years ago and that this has now rocketed to 20%. According to the Office for National Statistics, transport accounts for 13.7% of the average weekly household budget, of which motoring costs form the vast majority (11.1%) . For family households with two cars, the figure is likely to be significantly higher.

With costs so high, more than half are changing the way they drive to conserve fuel. Interestingly, while driving to conserve fuel has environmental benefits, only 12% of motorists claim that environmental concerns affect their driving style. This desire to save money can be clearly seen elsewhere in the Report, with motorists leaving longer between servicing and changing their insurance and cancelling breakdown cover.

For example three in ten motorists are leaving longer between services to save money with more than a quarter claiming to service and repair their own cars. Some 14% also claim to have cancelled their breakdown cover and 19% have reduced their level of cover. These trends are obviously of concern because of the increased risk of more accidents attributable to motorists driving unroadworthy vehicles. Despite cash-strapped motorists cutting back on breakdown cover, the number of breakdown calls resulting from motorists running out of fuel soared by 20% compared to 12 months ago due to rising fuel prices, showing the increasing risks that motorists are prepared to take to try to squeeze the last mile out of their tank.

"Fuel duty is now a social issue. Pump prices in the UK are the highest ever recorded and economic activity is being stifled. The Treasury's fuel duty model no longer works and the pressure on business and families is unbearable and unsustainable. I don't believe this Government understands the huge discontentment they're creating. They need to reduce duty as soon as possible."

Quentin Willson
Motoring Journalist and National Spokesman for FairFuelUK

RAC is a key supporter of the FairFuelUK campaign which is calling on Government to cut fuel duty to ease the financial pressure on motorists, stimulate growth in the economy and create thousands of new jobs. Research by the Centre for Economics and Business Research reveals a 2.5p per litre cut in fuel duty would boost GDP by 0.33%, create 180,000 jobs over 12 months and would not cost the Treasury a penny in lost revenue.

3.2 City versus countryside

36% of motorists believe other drivers could get out of their cars and use public transport. But the view is polarised between 47% of people in cities believing this against just 29% of motorists in rural areas – reflecting the lack of alternatives to the car in many rural areas.

The difference becomes ever more pronounced on the issue of car dependency:

  • 85% of people who live in the countryside would find it very difficult to adjust their lifestyle to being without a car, against 69% of those who live in a town or city.
  • 47% of all motorists said they walked or cycled more and left the car at home, but only 31% of rural drivers were able to do this, against 58% of urban ones.
  • 40% of all motorists used public transport for short journeys, but only 28% of rural drivers were able to do this, against 51% of urban ones.
  • 32% of all motorists used public transport for long journeys, but only 26% of rural drivers were able to do this, against 43% of urban ones.

3.3 Giving up

As the economy continues to bump along the bottom, motorists are being forced to change their behaviour and give up activities to keep motoring costs down. Some have made radical changes such as the 2% that sold their car and now use public transport, a bike or motorbike instead, and the 12% that have downsized their car. But the vast majority are just using their car less:

  • 9% have already restricted their social life, and a further 29% would have to make similar changes if the cost of motoring continues to increase.
  • 10% have already given up transporting children to school and out-of-school activities and further 21% would have to give these up if the cost of motoring continues to increase.
  • 5% have already given up family commitments such as transporting elderly relatives and 25% would have to stop doing this if the cost of motoring continues to increase.
  • 10% and 8% respectively have already stopped using their car for commuting or for work with a further 14% and 16% having to do so if the cost of motoring continues to increase.
  • 5% have already stopped using their car for food and essential shopping with a further 18% poised to do so if the cost of motoring continues to increase.
  • 5% have stopped using their car to get to the doctor, dentist or a hospital appointment with a further 14% forced to stop if the cost of motoring continues to increase.

The above figures are similar to those reported last year, which means an increasing number of motorists and their families risk becoming isolated as they can no longer afford to visit friends and family or attend social gatherings. This could eventually lead to a disconnected and dysfunctional society where the only affordable social interaction for the less affluent is via a computer or phone from their home. There is also evidence of communities suffering as local shops and community facilities such as restaurants and sports centres shut down because local people can no longer afford to travel to use these facilities.

3.4 Car dependency

Motorists are driving less, typically for economic reasons, but that does not make them feel less dependent on their cars. Indeed, nearly half say they feel more dependent on their car than they did five years ago, despite just over a third saying they drive less than they did then. And a third says they feel more dependent than they did just a year ago against a background of more than a quarter saying they drive less.

The majority of motorists have reduced the number of journeys they make and amalgamated trips wherever possible. This means that while they may have actually reduced their car usage overall, they are no less dependent on their cars and may have no other alternative to driving.

Interestingly however, while 84% of motorists shop online, almost two thirds say it has made no difference to either their car dependency or their car usage.

So what are the journeys motorists are so dependent on their cars for, and could they use other forms of transport?

  • 63% could only carry out family commitments in their car, and 26% could do it by public transport but would find it much more difficult. However this soars to 81% of rural drivers against 43% of urban ones who are totally car dependent.
  • 57% could only do food and other essential shopping by car, while 29% could do it by public transport but would find it much more difficult. Split down 73% of rural drivers need their car against 46% of urban ones.
  • 45% could only maintain their social life with a car, while 30% could do it by public transport but would find it much more difficult. However 68% of rural drivers are totally dependent against just 27% of urban ones.
  • 53% could only transport their children to activities and school by car, while 25% could do it by public transport but would find it much more difficult. 74% of rural drivers versus 36% of urban ones couldn’t get out of their car.
  • 51% could only respond to medical issues by car, while 27% could do it by public transport but would find it much more difficult. But 69% of rural drivers against 38% of urban ones need their car.
  • 63% and 54% need their car for work or commuting respectively, while 18% and 24% respectively could do it by public transport but would find it much more difficult. 81% and 78% respectively of rural drivers versus 48% and 40% of urban ones need their car for these activities.
"It's not surprising that many motorists feel they have no alternative to the car; cuts in bus funding have seen 1100 services disappear over the last year and the design and location of some new developments add to car dependence. The Government needs to use planning powers and fuel tax income to unhook people from car dependence and give them real and attractive alternatives to more of their car journeys."

Stephen Joseph
Chief Executive, Campaign for Better Transport

3.5 Motoring alternatives

Motorists living in urban areas will often have a range of public transport alternatives to allow them to conduct their lives without their car. Those in rural areas commonly have no choice as public transport options will be limited and for many, do not exist at all. But for those living in the suburbs, public transport options may exist but are often inadequate or inconvenient. For example a third of suburban motorists could do their essential shopping without a car but it would be more difficult, against one in three of urban drivers and one in five of rural drivers who have little choice.

It is this lack of good alternatives to the car, rather than an underlying reluctance to use public transport that appears to drive behaviour. Thus, 60% say they would get out their cars more if public transport was better. But ironically, the state of the economy has led to cut backs in the number of bus services, particularly in rural areas and this, combined with increasing fares makes public transport less attractive and less viable for many motorists.

3.6 Insurance

The price of insurance soared by 14.4% in 2011 , forcing motorists to do all they can to reduce this cost:

  • Seven in ten have used a price comparison website.
  • Half have switched provider for a better deal.
  • Two in five have renegotiated their premium with their current insurer.
  • 15% have reduced their level of cover and 24% removed extras such as legal insurance.

More worryingly:

  • More than one in ten has named someone else as the registered driver to save money – an illegal practice known as fronting.
  • 7% have cancelled their cover altogether – though some of these will be those who have also sold their car.

Tax DiscFrom December 21, insurers will not be allowed to use gender to determine the price of car insurance premiums. The changes are needed because of a European Court of Justice ruling stopping gender being taken into account in any insurance contract. The effect of this will be to significantly push up the cost of cover for young female drivers, while reducing the cost of cover for young males, though by a lower percentage. All other age groups are likely to be affected but by less significant amounts.

Meanwhile Government is also considering proposals to slash the number of whiplash claims by setting a minimum speed limit below which such claims cannot be made. It also wants to limit referral fees, to lawyers in particular, to reduce the cost of claims, and hence premiums.

3.7 Company car drivers and money

Company car drivers are significantly less affected by the cost of motoring than other groups of drivers so their attitudes differ:

  • 48% say they will have to cut down on the amount they drive if fuel prices continue to increase compared to 68% of private motorists.
  • 53% have combined journeys to save money compared to 64% of private motorists.
  • 39% have walked or cycled more compared to 47% of private motorists.
  • 49% have changed their driving style to conserve fuel compared to 54% of private motorists.

4.0 Motoring priorities and funding

2.0 Who is the motorist?