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Costs of car ownership revealed

Written by | Posted on 06.02.2017
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LeasePlan’s CarCost Index 2016 reveals that the UK is the seventh cheapest country for driving a diesel car and the eighth cheapest country for driving a petrol car

The low cost of driving a diesel car, at an average of £374, and a petrol car, at an average of £396 per month, could be a contributing factor to the rise in car sales in 2016 with 2.69 million cars registered last year, 2% higher than in 2015¹.

The survey also revealed the UK had the second cheapest Service Maintenance and Repair costs across the 24 European countries surveyed.

Highlights:

  • The average cost of car ownership can vary by up to £296 per month between the most expensive and cheapest of the 24 European countries surveyed
  • Depreciation costs (37%) are the largest expense related to car ownership, followed by road tax and VAT (20%)
  • At £598 per month, car owners in the Netherlands pay the most to drive a diesel car, and at £317 per month Hungarians pay the least.
  • The UK is the seventh cheapest country for driving a diesel car at £374 per month
  • The UK is the eighth cheapest country for driving a petrol car at £396 per month
  • Service, maintenance and repair costs second cheapest for UK across 24 countries surveyed
  • Norway is the most expensive country for driving a petrol car at £609, while Hungary is the cheapest at £313 per month

At £609 per month, Norwegians pay almost twice as much for their petrol car as Hungarian drivers (£313). The Netherlands is the most expensive country for diesel car drivers. On average, the Dutch spend £598 per month on their diesel vehicle. Here again, Hungary is the cheapest country (£317).

These are just a few of the findings of the LeasePlan CarCost Index 2016, a recent study of the costs of car ownership and usage of petrol and diesel cars in 24 European countries. This study maps out all the cost elements of an automobile in great detail at an international level, drawing upon LeasePlan’s knowledge and experience from its own multi-branded fleet using index methodology.

The LeasePlan CarCost Index provides insight into the total cost elements of vehicles in the small-to-medium car segment, such as Renault Clio, Vauxhall Corsa, Volkswagen Golf and Ford Focus. The Index compares the most important cost elements, like purchase price, deprecation costs, repairs and maintenance, insurance, taxes and fuel expenses, including winter tyres if required by law. The analysis is based on the first three years of operational costs and an annual mileage of 20,000 km.

European divide: regional differences

Within Europe, the average cost of driving a small to medium car can vary as much as £297 per month. The top three most expensive countries for driving a petrol car are Norway (£609), Italy (£583) and Denmark (£579). The ranking of most expensive diesel car countries is led by the Netherlands (£597), followed by Finland (£588) and Norway (£586). It’s noteworthy that in East European countries like Hungary, the Czech Republic and Romania, the costs of driving a petrol and diesel car are significantly lower, starting at £317 per month.

Car owners have little influence on the costs

Depreciation costs are the main contributor to the total cost of car ownership. Within Europe, the average depreciation costs for small to medium cars represent 37% of the total cost. In Hungary, the low overall cost is due primarily to the lower than average purchase price which positively affects the deprecation costs. Road tax and VAT account for 20%, while fuel contributes 16% to the total cost of a car per month. This means that car owners have relatively little influence on the costs as 84% of all expenses are fixed.

In only six of the 24 European countries studied, driving a diesel car is more expensive than driving a petrol car. In the UK, despite the pump price for diesel being more expensive than petrol, other factors such as fuel economy, and reduced running costs, explain the lower total cost for running a diesel vehicle.

Environmental taxation plays a role

The study also shows that there is a strong correlation between the high overall cost and high road tax and VAT across both vehicle types for the most expensive countries (Italy, Nordic countries and the Netherlands) and vice versa for the most inexpensive countries, which are taxed the least (Hungary, Czech Republic, Romania).

This can be seen as a reflection of the relatively strong shift toward alternative fuels ² in the more expensive countries, which translates into environmental regulation via taxation. For example, in the Netherlands VAT and road tax add up to 31% of the total costs of driving a diesel car. When it comes to petrol vehicles, Norway is number one in taxes, which can add up to 29% of the total cost. In fact, there are now 100,000 electric vehicles on the roads in Norway ³ with plans to aim for 100% of new vehicle sales to be zero emissions by 2025.

 

Matt Dyer, Managing Director, LeasePlan UK commented:

“An often overlooked factor when buying a new car or van is depreciation. Yet as we’ve seen in the CarCost Index it’s also the single biggest factor affecting running costs.

Indeed, the overall lack of visibility over a vehicle’s running costs, whether taxation, deprecation or maintenance, all need to be considered when weighing up the benefits of car ownership versus leasing or other emerging mobility alternatives.

Our presence throughout the automotive value chain – combined with our global scale – allows us to manage lease vehicles cost competitively and often at a lower base cost for our customers than purchasing their own vehicles.

Due to the complexity of these cost elements, we recommend that people consider the Whole Life Costs of the vehicle when deciding to look at a new car or van. Take the time to look into alternatives to ownership as products such as leasing can be lighter on the wallet and the environment.”

 

 


 Find out more:

View the LeasePlan CarCost Infographic here: LPUK CarCosts UK Conversion

 

About the LeasePlan CarCost Index 2016

The future of mobility and the vehicle leasing industry are being shaped by accelerating economic, technological and social developments. LeasePlan aims to unlock valuable knowledge about global mobility throughout its network of companies in 32 countries worldwide. The CarCost Index is part of LeasePlan’s MobilityMonitor. The LeasePlan MobilityMonitor enables readers to stay up-to-date on key developments and to make informed decisions concerning fleet management and driver mobility.

The CarCost Index 2016 Index analyses the overall costs of owning and operating vehicles in 24 countries: Austria, Belgium, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Romania, Russia, Slovakia, Spain, Sweden, Switzerland, Turkey, and the United Kingdom.

 

Sources:

[1]  Rise in Car Sales in 2016: http://www.bbc.co.uk/news/business-38516247

[2] Environmental Taxes in Europe, source Göteborg University, Sweden. http://www.efdinitiative.org/sites/default/files/environmental20taxes20in20europe20-20kohlin_0.pdf

[3] Norway hits Electric Car Milestone:  http://www.climateactionprogramme.org/news/norway_hits_electric_car_milestone

Conversions from Euro to British Pound made on 2nd February 2017, when one Euro equates to 0.86 British Pound.

 

 

 

 

 

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