RAC Highlights Depreciation – I Don’t Do Depreciation!

Posted on | October 25, 2006 | Comments Off

Although most motorists will have heaved a sigh of relief as fuel prices recently saw a much needed dip, the news isn´t all good. In fact, new figures revealed by the RAC´s ´Cost of Motoring´ index reveal that the cost of running a vehicle is steadily rising.

RAC The ´Cost of Motoring´ index is a piece of research produced every six months which tracks all costs associated with running and owning 17 different kinds of car.

According to the latest figures released, the average car now costs more than £5,500 a year to run – which works out at £15 per day.

With increases in congestion charges and the very real possibility of road pricing creeping over the horizon, car owners are having to watch the pennies even more carefully than before. Amazingly the cost of ownership has risen by the cost of an average package holiday – £539 – in the last 12 months.

Before you read the next bit, remember that my new cars’ costs are fixed – there is NO depreciation!

The old ghost of depreciation still haunts car buyers, with the average person now losing £2,420 per year – equivalent to a staggering £46.50 per week. This is due to depreciation increasing by £432 or 22% in just 12 months, and this growing cost is driven by a reduction in the projected residual value of the cars in the index after 3 years – from 52% to 45% of the recommended retail price.

Other significant developments in the last 12 months, highlighted by RAC’s “Cost of Motoring” index include:

* Fuel price fluctuation means costs are down from £1,155 to £1,112 – a 3.7% drop

* The cost of finance has grown from £948 to £1,040 – up 10%

* Insurance premiums have increased from £389 to £412 – an average annual growth of 6% across the market

* Maintenance costs rose from £271 to £300 – 10% more than 2005

* Tax is up from £124 to £129 – a 4% rise.

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