Thinking of buying a new car? Think about whole life costs

More road charges? No thanks, Mr Chancellor

More road charges? No thanks, Mr Chancellor

Fantastic deals from manufacturers are luring many of us into new cars – a massive 2.216 million of us, in fact, are expected to sit behind a brand new set of wheels this year*.

Perhaps we’re fed up of scrimping or perhaps we’ve squirreled away some savings for a rainy day which is now burning a hole in our bank accounts or perhaps it’s the renewed availability of finance – the value of car loans rose 33% in August compared to the same month last year equating to a massive £606 million overall.

Before you start Googling your next purchase, there’s a few things to think about which you may not have otherwise considered.

Whilst we are all far too aware that the fuel economy figures banded around by manufacturers bear no real resemblance to the number of times we find ourselves at the pumps, automotive analyst Jay Nagley thinks consumers have a tendency to overpay for what is perceived as fuel economy in a car.

In fact, motorists should wise up to the car’s entire cost or as we in the trade refer to it as ‘whole life costs’. Whole life costs take every factor of running a particular car over a certain period of time, usually three years, including its future resale value.

Sometimes the car with the higher price tag or the better fuel economy or attractive CO2 emitting figures are not necessarily the most cost effective. Car buyers may automatically think of a diesel powered car as the economical option but with petrol cheaper at the pumps combined with the 3% levy imposed on the list price of a diesel vehicle, a petrol powered car may prove more economical.

Usually a low CO2 and a high MPG are found together, Nagley also points out in the ‘whacky world of CO2 and the environment’, nothing is quite what it seems.

Under pressure from the EU to hit CO2 targets by 2015, manufacturers have certainly worked hard to reduce the carbon footprint of the average motorist but a small car is able to complete 75% of the test using no more than 10 bhp which, as Nagley said, makes your average OAP appear to drive like Lewis Hamilton.

It may not surprise you to learn, the cars tested are not showroom cars but:
* Over-inflated tyres are used
* Low-friction, high-tech oils are also in use
* Panel gaps are taped up to ensure air resistance is kept to a minimum
* Test rigs are heated, to around 30C, in fact, not your average temperature in the UK

Whilst the supermini is the largest sector in the UK at some 30%, SUVs are the second at around 11%. It appears we can be seduced by a bit of style and are willing ‘to pay’ the CO2 penalty, around 15-20g/km on average. EVs may be a good second car and these could become more popular as well as easier to tax with the introduction of wireless charging while you drive but Nagley believes the figure of 10% on our roads by 2020 is optimistic and 2-3% is realistic whilst hybrids will account for 5-8%.

The UK’s motorists, it seems, does not have a green agenda which would probably be a bit of a disaster for the government coffers anyway. If we all stop driving conventionally powered vehicles, particularly diesel, how would the government cover the reduced revenue? Nagley asks. He suggests the only route would be road pricing but don’t panic, Nagley thinks this will never happen because it equates to political suicide. That’s right, folks, it wouldn’t get past us!

Nagley was talking at a trade event organised by B2B magazine Automotive Management last week. AM’s Used Car Market Conference saw around 230 delegates listen to industry experts at the Ricoh Arena.

*Source – Society of Manufacturers Motors and Traders
**Source – Finance and Leasing Association

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