Triple whammy of rising car costs sees drivers cut back use
A survey by research site Consumer Intelligence found 34% of drivers have cut back to keep costs down, rising to more than two out of five (42%) in London.
Average car insurance premiums are rising at a rate of of 9.3% a year, according to Consumer Intelligence, thanks to three successive Insurance Premium Tax (IPT) hikes, which will see the rate double from 6% to 12% in less than two years when the final increase comes in on 1 June.
Petrol prices have also been rising, reaching their highest level since December 2014.
And new Vehicle Excise Duty rules coming into effect on 1 April will increase the cost of purchasing and running a new car.
The nationwide research shows more than two out of five (43%) car owners are concerned about the rising cost of motoring with 17% saying they are very concerned.
However, most drivers are keen to stay on the road no matter what happens to the cost of motoring – just 11% of car owners say they would consider giving up if the cost of motoring rose by £500 a year while a £1,000 rise would deter only 29%.
Drivers in London are more likely to give up their cars if the cost of motoring increases, with 23% saying they would give up if they have to pay £500 a year more, while 48% said the same if costs went to £1,000 extra.
More than half (55%) of those polled expect to pay more for fuel over the next year while 45% expect their insurance bill to increase and 32% believe the cost of maintenance will rise. Just under a third – 29% – believe their road tax bill will rise in the next 12 months.
Consumer Intelligence also found that despite the financial squeeze, car sharing clubs aren’t popular. Just one in 20 would let others borrow their car through a car sharing club while a small 7% would consider giving up their car to join a club. In London, car sharing clubs are more popular – 19% of Londoners would consider the schemes.
Ian Hughes, chief executive of Consumer Intelligence, said: “The financial squeeze on motorists is tightening and is only going to get worse.
“Rising fuel prices were a major contributor to inflation jumping to its highest level for three years of 2.3% but that is not the only price pressure drivers face.
“Insurance premiums are climbing thanks in part to increases to Insurance Premium Tax which has doubled in less than two years and on top of that there are road tax changes and the general cost of maintenance.
“Despite all that it seems the love affair with the car is still strong with most drivers willing to shrug off increases of up to £1,000 a year and low levels of interest in car sharing.”