/ 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 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 CO2 emitting categories (CO2 VED labelling bands A or B). 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

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 (CO2) in the legislated Type Approval tests. Older cars will 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

/ Motoring Costs 2006
Petrol Cars
Purchase price of the car when new:
See / Up to / £10,000 to / £13,000 to / £20,000 to / Over
note: / Standing charges per year, / £ / £10,000 / £13,000 / £20,000 / £30,000 / £30,000
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
H / Service labour costs / 2.46 / 2.88 / 3.98 / 4.60 / 5.09
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.
/ Motoring Costs 2006
Diesel Cars
Purchase price of the car when new:
See / Up to / £10,000 to / £13,000 to / £20,000 to / Over
note: / Standing charges per year, / £ / £10,000 / £13,000 / £20,000 / £30,000 / £30,000
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
H / Service labour costs / 2.46 / 2.88 / 3.98 / 4.60 / 5.09
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.
Motoring Costs 2006
Costs for SUVs (Sport Utility Vehicle)
See / Petrol / Diesel
note: / Standing charges per year, / £
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
* NB: Petrol at / 91.0 / pence per litre / Diesel 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

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

How to cut motoring costs

Standing charges / AA Trust advice
Road tax / Buy the most CO2-efficient (uses least petrol/diesel) car in your price range to reduce road tax
For cars registered since March 2001, road tax is less if the car produces lower volumes of CO2 www.vcacarfueldata.org.uk
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 CO2 band) models
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
Cost of capital / You can tie up less capital by buying a smaller, ‘greener’ car
Insurance / Smaller, more economical cars usually attract lower insurance premiums