The average annual cost of owning and running a new car has jumped by 6.3% in the last 12 months, according to RAC's annual Cost of Motoring (CoM) Index¹. The £346 increase, which is twice the rate of inflation², takes average costs up to £5,869 from £5,523 in 2009. This equates to £112.87 per week or 48.91p per mile.
The Index addresses the costs of owning and running a new car and includes fuel, insurance, maintenance, road tax, breakdown cover, depreciation and finance.
In addition to the overall costs, the Cost of Motoring Index also focuses on the day-to-day running costs by stripping out both depreciation and car finance. New car running costs have increased by £197 (8.9%) to £2,417. This figure is up from £2,219 in 2009 and equates to a weekly cost of £46.48 – an increase of £3.79 per week.
Overall, it now costs an average of £736 more to own and run a car than it did before the onset of the recession and financial crisis in 2007.
High fuel prices continue to hurt motorists
A key contributor to this year's rise in the cost of motoring has been the unwelcome return of record high fuel prices. The cost of fuel for the average motorist has escalated £116 (9.8%) to £1,300 per year.
Both diesel and petrol car owners have witnessed inflation busting increases at the pumps of 14.8% and 12.6% respectively. However, the Index has identified one small crumb of comfort for new car owners with an improvement in fuel consumption of 2.7% -slightly offsetting the steep rise in fuel prices.
RAC motoring strategist Adrian Tink commented: "Rises in the cost of motoring for Britain’s 34 million drivers shows no sign of ending. Owning a car is a necessity for most people but they’re once again being hit in their pockets – this time by an increase in costs which is double the rate of inflation.
"Fuel continues to be a major contributor in the rising costs, with little being done to control the spiralling prices at the pumps. It's time for the Government to look closely at the problem and take action, starting by cancelling the planned fuel duty rise of 0.76p in January 2011.
"Motorists will continue to be hit hard in the New Year with the additional rise in VAT to 20%. This is likely to take us into a new era of record petrol prices, which is why it is vital the Government takes a close look at the issue to help end the war on motorists’ pockets."
Overall, used cars continue to be considerably cheaper to own than an equivalent new vehicle. The ownership cost of a used car is now £4,441 or £85.41 per week. This figures is £1,428 (24%) cheaper than for a new vehicle. Year-on-year, despite increases in fuel, insurance and maintenance costs, there has actually been a small reduction (£18) in used cars costs since 2009. This is explained by the fact that depreciation on used cars fell 14.2% in 2010 as a result of prices in the used car market falling from the 2009 highs.
When looking at the running costs, used cars are actually £553 more expensive to run than new cars. This is primarily due to maintenance costs which are considerably higher (£437) because of the added wear and tear on older vehicles. Also, fuel consumption is worse and insurance is more expensive on older vehicles.
1 RAC Cost of Motoring Index is based on a pool of 17 new cars and weighted by their level of ownership. Research on the Cost of Motoring Index was conducted by CAP Motor Research, Innovation Motorconsult and RAC. The data was analysed and compiled by Go-Motoring, who also consulted Parker's Guide Target Prices, Mammoth Cars, Car And Van Deals Direct, Drive The Deal, UK Car Discount, Vans Direct, Van Discount, Van Man, Car And Van Deals Direct and petrolprices.com for research figures.
2 Based on the October Consumer Price Index of 3.2%