Running costs could outstrip value of car

Millions of motorists face a situation where it will cost more to keep their car on the road than their car is actually worth, says uSwitch.com, the independent price comparison and switching service. This ‘negative equity' will come about if petrol prices reach £2.30 a litre in 2009 as predicted.

With petrol prices currently at 117.2p per litre, British motorists are now forking out more than £65 each on average to fill up their tanks. However, at £2.30 a litre, motorists could expect to pay £128.80 every time they fill up at the pumps in 2009. This amounts to an eye watering £3,387.29 a year. When you add in tax and insurance, the average driver will find that their car will only be worth £385 more than its running costs. Almost 15 million (48%) of cars on the UK's roads are over 5 years old making the average car now worth £4,227. In other words, 91% of its value will be spent on fuel, tax and insurance. For many motorists it will be even worse - it will cost more to keep their car on the road than the car is actually worth.

For example, a six year old Ford Focus valued at £2,895 would cost £3,368 a year to fill with petrol - £723 more than the car value. The owner will then be hit with tax of £120 a year under the new bands announced in this year's Budget. The car will also need to be insured. In total, the running cost of the car would be £3,754 - £860 more than the value.

Motorists have already seen a 33% or £16.41 increase in the cost of a full tank since 2007. A hike in petrol prices to £2.30 per litre will see a motorist's annual fuel bills soar by £1,661.25 in 2009 - equivalent to 24% of the predicted net salary in 2009 of £19,167.98 (£25,189.84 gross). In total, the national spend on fuel in 2009 could be as much as £104 billion.

Ann Robinson, Director of Consumer Policy at uSwitch.com, comments: "We are heading towards a situation where motorists are going to be priced off the roads. At £2.30 per litre a driver's annual spend on petrol will soar by almost £2,000. Drivers are also going to need to contend with rising insurance premiums and increased road tax as announced in the Budget.

"As a direct result of these price hikes, motorists are going to be forced to think carefully about when, where or even if they use their cars. For some there are other options such as public transport, but many do not have a choice. Those in rural communities, the elderly and lower income families will really suffer - don't forget that for many of these a car is a lifeline and their quality of life will suffer if they are unable to afford to use it. Some drivers will be held to ransom over spiralling costs, but I fear that many others will have no choice but to give up their car altogether."

Top tips for fuel efficiency

Use your gears wisely- driving in the highest gear possible without labouring the engine is a fuel-efficient way of driving. A vehicle travelling at 37mph in third gear uses 25% more fuel than atthe same speed in fifth gear

Drive smoothly- think ahead! By applying light throttle and avoiding heavy braking, you can reduce both fuelconsumption and wear and tear. Try to predict traffic at junctions and whenqueuing avoid accelerating and then braking. Research suggests driving techniques can influence car fuel efficiency by as much as 30%

Lighten your load- think carefully about what you need on a journey. If you do not need something, do not pack it.Remove roof racks if not needed. The lighter the load, the lower the fuel consumption and emissions - and the higher the fuel efficiency

Check your tyre pressure- it is estimated that about 50% of tyres on the road are under inflated.

Aside from increasing the rate of wear, this wastes fuel and decreases your fuel efficiency

Leave the car at home- probably the best way to decrease the amount of petrol you burn, is to leave the car at home, and take a bike, bus, train, or to walk. A quarter of all car journeys in Britain are less than two miles long, and walking or cycling are cheap, clean alternatives, and healthy too!
Invest in a new fuel efficient car- new cars come in all shapes and sizes, and it's possible to pick a new car that cangreatly reduce your fuel bill, and your fuel emissions