Cost of motoring down slightly in 2014

Big jump in car insurance but other costs fall to leave motorists €75 better off

The cost of running a family car in Ireland has dropped slightly by 0.71% in the last 12 months, according to our AA annual cost of motoring index. It now costs €10,571.20 to run a family car in the ‘Band B’ tax category*, a decrease of €75.12 on the previous year. This means the average Irish motorist is €6.26 better off each month compared to last year.

The decrease comes despite a sharp rise in car insurance premiums which are up by 8.5% on average for the year up to July 2014 compared to the same period in 2013.  Offsetting this hike were variables such as the price of new cars which are down by 3% on the previous 12 months.  This decrease is reflected in the depreciation figure we used in our Cost of Motoring Study.

Car insurance is the big story this year. There’s a hefty hike across the board but it is not distributed evenly so you really have to shop around. Some insurers had well-documented problems last year and we know that there were more accidents; the sad road safety data tells us that.

Deflation has also contributed to the slight reduction in the cost of running a car.  According to the CPI, transport related goods  have seen a 2% price drop year on year which we reflect in the price of tyres, servicing, repairs and parking.

We calculate the annual cost of motoring each year using a holistic figure that includes the obvious things like fuel, insurance, servicing but also factors in a whole range of other costs. These include costs like depreciation and interest charges, replacement for components like tyres etc over the car’s life. The figure assumes a motorist that buys a new car and retains it for 8 years at an average annual mileage of 16,000 kms.  All repairs, replacements and servicing are carried out as per manufacturer’s recommendations.
Each year the AA calculates average prices for each of the respective tax bands and illustrates the cost of running an average family car.  In previous years a Band C car was taken as an average family car however this has been amended to Band B this year to reflect the shift in new car sales over the last couple of years.  In terms of new cars almost three times as many Band B vehicles were purchased in 2012 than Band C cars.   

The cost of running a Band C car in 2013 was €11,935.  This has dropped to €11,849.60 this year.
Band G cars were also removed from the study as there are so few of them. Improvements in car technology have made these very-high emission cars very rare; just 13 were bought in the whole country in 2013.

One factor which has had a minimal effect on the cost of motoring over the past year is fuel prices.  “Following a relatively flat year in terms of pump prices we found ourselves inputting virtually the same average petrol price into this year’s review.”  The average national price of a litre of unleaded petrol in July 2014 was €1.574 compared to €1.576 in July 2013 according to our monthly fuel price index.  Diesel has seen a slight drop during the same period of just 0.7 cent per litre costing an average of €1.476 per litre during July 2014.

This is the first decrease that we’ve seen for a few years albeit a small one.  It makes a nice change to be able to report that fuel prices haven’t driven up the annual cost of motoring this year.  The big story is the substantial price rise in insurance premiums.  If you’re not happy with the renewal price you’re quoted put in the leg work and shop around.  While premiums are up across the board some providers have hiked their prices more than others.

The full details of our AA’s Cost of Motoring analysis for 2014 are available here: AA Cost of Motoring.

Notes:

*Defined since July 2008 as producing emissions of between 120-140g/km per kilometre driven. Examples of 2014 models include: Fiat Panda Pop 1.2 8v (69 bhp), Chevrolet Aveo 1.2,LSF, Honda Civic 1.8 i-VTEC Sport and Mazda6, Saloon, SKYACTIV-G 2.0 (145 PS) (M), Manual.
** a car that does 16,000 kms or 10,000 miles per year at a fuel economy rate of 30 miles per gallon will use 150 litres of fuel per month. 
The AA calculates the total cost of motoring in Ireland for different categories of car based on an annual mileage of 10,000 miles or 16,000 kilometers. 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.
Shopping around to find cheaper deals on your car insurance can really pay off. Multi-product discounts can further lessen the price as well.  You can also find yourself enjoying additional benefits too.  AA Members for example can get fully comprehensive car insurance to drive other cars, even when they’re borrowed. See here for more.