The cost of running your car

Author: Michael O'Kelly

The latest RAC Cost of Motoring Index estimates that the yearly cost of owning and running a small car in 2010 was just over half that for a people carrier. They estimate the cost of a small car such as the Vauxhall Astra at £4,466/year, while a Ford Galaxy people carrier costs an estimated £7,816/year. The per-mile costs are £37 and £65, respectively. The estimates include the cost of finance and depreciation.

The RAC report does not show how the components of the costs differ between the people carrier and the small car, but it does give a detailed comparison of component costs for new vs. used cars. The pie chart shows the components of the cost of running an “average” new car according to the RAC Index. The “average” is in quotation marks because it is not clear how the data in the survey are weighted.

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The total cost of running an “average” new car in the UK is £5,869, while running an “average” used car costs £4,441.

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Again, the cost of finance and depreciation are included in these figures.

Costs of running a car in the UK ($)
UK new UK used
Fuel 1958 2102
Insurance 727 776
Maintenance 574 1232
Miscellaneous fees 383 364
Depreciation 4626 1566
Finance 571 648
Total 8839 6688

 

As might be expected, used car owners save on finance costs, but pay more maintenance. Used car owners also spend more on fuel, partly because there has been a small gain in fuel efficiency in newer cars (the “average” gain in fuel efficiency in 2010 is estimated by the RAC to be 2.7%).

One can make a rough comparison with US costs for running a new automobile from the US Bureau of Labor Costs Consumer expenditure survey, available for 2009. The costs in this survey are total costs for running cars and trucks incurred by a “consumer unit”. While the total costs are likely not comparable (e.g. some in the survey may own no car or more than one), the components of the cost may be approximately comparable with the components in the UK.

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Fuel in the US is one-third to one-half the EU price, but despite this, fuel is a much larger component of the US cost, no doubt reflecting higher mileage per “consumer unit” in the US. By contrast, “net purchases outlay” (presumably similar to the RACs “depreciation”) is a much smaller component in US costs, compared to those in the UK. Some of these differences may be due to differences in definition of items by the two surveys.

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Tony Manners

Article says:

annual cost for a small car = £4466

per mile cost = £37

I deduce that average mileage = 121 miles


"Used car owners save on finance costs."  

Finance costs:

new cars £571

used cars £648


Explanation?

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