When it comes to cars, people spend an awful lot of time considering what they would like and how to finance its purchase. When it comes to looking at the running costs for the vehicle, most people pay very little attention to it. In fact, way too little time.
Surveys in the UK have found that close to two-thirds of people see motoring costs as their second largest outgoing after the mortgage or rent – presumably those are the people without young children requiring child-minding.
Almost exactly the same proportion of those surveyed, however, said they had no idea of what the actual annual bill was.
In the old days, AA Ireland used to publish a fairly detailed rundown of the costs involved in keeping a car on the road. The arrival of electric vehicles and the continuing surge in the popularity of SUVs mean the variables are now so wide that compiling precise figures is difficult.
That doesn’t mean we should just abandon budgeting in the same way we keep tabs on other areas of household costs, though.
Fuel is one of the big points of difference these days. An electric vehicle will cost considerably less in fuel terms than one with a petrol or diesel engine. And that’s important, as fuel will be one of the largest single items in your budget.
The Sustainable Energy Authority of Ireland compiles data on fuel costs and figures for the first quarter of this year show that it costs €10.63 per 100 kilometres. That compares with €8.99 for a diesel engine and €3.37 for an electric vehicle.
That EV cost presumes that 90 per cent of your charging is done at home using an economical smart meter night rate with the balance done using fast, high-powered public chargers.
That’s obviously an average figure and one that moves with the market all the time. As anyone who keeps an eye on fuel prices will know, there can be considerable variations from station to station.
The figures are also based on a small family car size. If you’re driving a bigger vehicle, such as Ireland’s bestselling Hyundai Tucson for instance, the costs will be higher.
Looking at a current price of around €1.70 a litre and assuming you drive around 16,000 km a year, that Tucson will cost you around €1,785 a year from your net income.
Insurance is another variable. How much you pay will depend on the vehicle, your claims history, your mileage and where you live, among other things. Younger drivers know that they will pay a significant premium until they build up a driver history. Anyone with penalty points can also expect to pay more.
And, of course, you will need to have the car taxed. These days, the motor tax you pay is based on the carbon dioxide emissions from the vehicle. For any car first registered since January 2021, this is based on the Worldwide Harmonised Light Vehicle Test Procedure – a standard that was brought in after the diesel engine emissions scandal.
You will pay anywhere from €120 a year to €2,400, depending on the emissions level. That bestselling Hyundai Tucson, for instance, will cost you €280, which is around the level you can expect to pay for most small to medium family cars.
Then, there is the cost for basic care and maintenance. Here, the general rule of thumb is that, on a like-for-like basis, the older the car, the higher the maintenance costs will be. This should be a factor you weigh up when making the original purchase decision.
People can be tempted to let servicing slide but that’s never a good idea, for two reasons. First, of course, there is an issue of safety. Comfortable as we are on the road when everything is going right, it can be easy to forget just how catastrophic things can be if they go wrong.
Leaving that aside, cars tend to operate more efficiently (and therefore cheaply) when they are in good condition. Long-fingering a service can lead to problems building up, costing you more on the road and possibly a bigger bill later on when you do eventually get the car seen to.
How much a service costs will depend on the car and where you go but the base service will cost around €125 for a petrol or diesel vehicle. That’s before the cost of the oil change, replacement brake pads or whatever. EVs have less to check and might be as little as €80.
These days, all cars will throw up dashboard information to tell you when a service is due but if for any reason it doesn’t, you really should be getting your car serviced every year.
Speaking of oil, it is quite astonishing how few people actually check the oil level in their car. Again, these days, a dashboard light will usually tell you when there is cause for concern but you really should be checking the oil level every time you check your tyres as part of a routine – and certainly before you undertake longer journeys.
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Low oil is one of the quickest ways of doing big damage to your engine.
After oil, the other great gap in vehicle care is tyres. They are not cheap, especially if you are driving a bigger or higher-spec vehicle, but they are the one thing connecting you to the road.
Talk to any mechanic, or the team at the National Car Test (NCT) centres, and they will tell you that balding or damaged tyres are among the most common issues they encounter. Lack of thread depth will put you and your passengers in much greater danger in wet or icy conditions, so it really is a false economy. You wouldn’t take the same risk in any other area of your life – or at least, most of us wouldn’t.
And keep them pumped to the correct pressure. Poorly inflated tyres will impact the car’s performance and increase your running costs.
Manufacturers choose tyres to maximise the safety and performance of their vehicles. Motor industry sources say that, ideally, you should stick with those tyres and thread pattern when replacing the tyres due to wear and tear. Budgets are what they are, however, and there is generally wriggle room between tyres.
This being said, cheaper tyres will be unlikely to last as long as the original spec.
Whatever you do, most mechanics will advise using the same tyres on all four wheels. As a bare minimum, make sure tyres on the front match each other and the same for those on the rear. If tyres are wearing unevenly, that too can be dangerous and you should get your tracking checked.
And, of course, if the vehicle is over four years’ old, you will have to contend with the cost of putting it through the NCT every two years – or every year if the car is 10 or more years old.
According to statistics from the NCT, roughly half of all vehicles countrywide fail their initial test. Of those who fail, around 10 per cent fail a retest. So, realistically, you are budgeting for more than the €60 testing fee, or the €40 for a retest.
Parking fees (and fines) and other basic practicalities like keeping the car clean or washed also have to be factored in. If you want to get really picky, you can even include the cost of your driving licence – and, if you are older, the cost of getting a GP to certify that you are good to be let on the road for another one or three years.
A survey by online marketplace carzone.ie found that average running costs for Irish motorists came to €220 a month last year. Fuel costs are marginally lower now but Central Statistics Office (CSO) data out yesterday says that motor insurance costs have jumped by almost 10 per cent in the past 12 months and by 13.4 per cent since the end of 2023.
The same CSO consumer price index data says that repair and maintenance costs are up 3.5 per cent since April last year and by 6.2 per cent since the start of 2024.
So, even if you think you have a fix on your budget for running your car, do bear in mind that it will have to be adjusted (almost always upwards) every year.
Those charges are also on top of the price of financing the car in the first place or taking accounting of the impact of depreciation on its value while you own it.
All told, finding the best way to buy your car is just part of the financial challenge of car ownership. But getting a reasonably accurate figure on what it is likely to cost you on a month-to-month basis to keep that car on the road is one way to reduce your stress over your personal finances.
You can contact us at OnTheMoney@irishtimes.com with personal finance questions you would like to see us address. If you missed last week’s newsletter, you can read it here.
