Fuel Down on last year but Insurance Costs Rise


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The cost of running a family car has fallen by 8.6% per cent in the last 12 months, according to the AA’s annual survey of motoring costs. It now costs €11,156 to run a small family car in the ‘Band C’ tax category (typical engine size of 1251 – 1500cc) for a year; down by €1,049 on the figure for 2008.


“The fuel cost reduction is the big factor and is clearly good news but remember that last Summer we had a fuel crisis before we had a credit crunch with record high prices. Although we have seen prices rise since January they are nowhere near as high as they were last year. In June 2008 petrol cost 130.5 cent per litre, it has fallen to 116 cent. That difference alone saves the average motorist over €18 per month.” Says public affairs manager Conor Faughnan.


The bad news is the cost of insurance, which is rising sharply at the moment and is up by 9% in the last 12 months.


“This is a worrying trend for motorists.” Says Faughnan. “Insurance prices fell year on year for five years running. By 2008 the cost was on average half what it had been in 2003. That rate of reduction could not go on forever but the trend has been sharply reversed. Insurers point to increased costs and reduced investment income, but for ordinary consumers this translates into a significant rise in the insurance bill.”


Interest rates are historically low and across a broad range of models there was no overall increase in the cost of new cars and in some cases prices had fallen. The AA also noted small reductions in items like servicing and parking which were in line with the overall inflation figure for the year.


The AA calculations show that a car that achieves 30 miles per gallon (9.5 litres per 100kms) and does 1600 kilometres per year will use 1500 litres of fuel. Last year that cost worked out at €1,957. This year the cost has fallen by over 11% to €1,740.


AA figures are currently based on petrol usage rather than diesel. Diesel cars account for 18% of private cars on the road, a figure that is certain to increase over time. For diesel users fuel price rises reductions were more dramatic. The retail price of diesel dropped from record highs of 142.9 cent last year all the way back to 104.0 cent. Diesel drivers now pay on average €48 less per month than this time last year.



View chart: http://www.aaireland.ie/publicaffairs/infodesk/cost_of_motoring.aspx

The AA calculates the total cost of motoring for different categories of car based on an annual mileage of 10,000, or 16,000 kilometres. Included are all motoring related costs, from depreciation to interest on capital to servicing and petrol. The figures are then broken down into ‘cost per kilometre’ and form the basis for mileage allowances paid by many companies to their employees.


The cost per kilometre for a small car works out at 76.48 cent up from 73.19 cent last year. Small family car is taken as tax Band C, roughly equivalent to the 1251 – 1500cc band for cars registered before July 2008.