There is lots of advice floating about on how to save money on motoring. These include the typical scenarios such as improving your fuel consumption, and shopping around for cheaper insurance. Of course the best way for managing that you're not paying more than you need to in running costs, is to ensure that you have the right car in the first place. Below we outline some tips and considerations to help you get good value for your purchase...
What size should your new car be?
Most people enjoy driving larger vehicles, but the vehicle you should select should suit your everyday purposes. The reason being that size does matter when running a car.
The 'pence per mile' cost of running a car is a useful tool to help you reach the true cost of motoring. If you can't find a recent figure online, you can easily calculate it yourself by finding the info that particular model's miles per gallon stats, divided by the average cost of petrol per gallon at that moment in time.
Once you've got a price per mile figure for the car, you can calculate roughly how much it will cost you to run each week, month, year etc. by totting up a figure of your typical weekly mileage.
Depreciation of Your New Car
Another reason that size matters is due to depreciation. Depreciation is how quickly your vehicle will lose value, which is of importance if you hope to recoup as much money as possible when you sell it on. The AA’s Motoring Costs report shows that larger/more expensive cars lose a disproportionate amount of their value as they get older.
On average, a new petrol car costing less than £12,000 sheds £1,217 of its value a year. However, if you buy a car worth in the region of £16,000 to £20,000 that figure is doubled. While diesel cars retain their value slightly more, the mantra of buy cheap to spend less still rings true
As a result of their cost-effectiveness to run, the supermini sector has grown by 34% over the past decade, according to the Society of Motor Manufacturers and Traders, beating family cars, such as the Ford Focus, to become Britain’s biggest car segment. That demand translates into a higher resale price, but the best resale performers are not always small.
According to a recent survey by automotive price analysts CAP, the Audi Q5 SUV is Britain’s slowest depreciating car, keeping 72.5% of its value after three years and 30,000 miles. And as a general rule, premium brands are best when it comes to resale values – after all, a three-year-old Ferrari is better than no Ferrari at all – but mainstream brands, such as Ford and Fiat, do well with smaller cars and more niche models such as SUVs.
How Tax Efficient is the New Car?
Thanks to a drive towards less emissions, you can also save money by selecting certain cars that are compliant with new emission standards. The government continues to persuade us to buy ever more emissions-friendly cars by manipulating the vehicle excise duty (VED) tax band. The less CO2 your car produces, the less tax you pay.
If it produces under 100g/km of CO2 you pay no tax at all. The car makers have jumped on this and now there are 108 VED-free cars on the market. They’re not all small cars either. In the family category you’ll find a Ford Focus, Volkswagen (VW) Golf, Audi A3 and Citroën C4.
Unfortunately cars in the low to zero tax band are often more expensive as they cost more to make. The VW Polo Bluemotion 1.2 diesel will set you back £4,000 more to buy than the equivalent 1.2 petrol model. The £100 per year tax bill you save won’t cover that premium. However, most low-emission cars are diesel which means you will make further savings on fuel
Diesel or Petrol
Diesels are more tax-friendly because they’re more economical, and can feel faster on the road, thanks to the extra power they have over petrol cars. They also make more money on resale. On the other hand, as we’ve noted above, they’re more expensive to buy, not to mention; noisier and heavier.
The main plus point though is fuel economy. Generally a diesel car will cover it's own purchase premium within a matter of months as they are so much more economical to run than petrol vehicles.
For example, the Alfa Romeo MiTo 1.3 litre diesel manages 78 miles per gallon. On the government website carfueldata.direct.gov.uk, the fuel cost is recorded over 12,000 miles at £1,022. That’s compared to the 1.4 litre Multiair petrol version, which would cost £500 more over the same distance. That means the £500 extra the diesel costs to buy is wiped out after 12,000 miles, and don't forget, there’s also the annual £120 saving on tax too.
According to Parkers cost calculator, even the VW Polo Bluemotion diesel would almost recoup its heavy price penalty over the 1.20 petrol version, with fuel costing £13,565 over 30,000 miles compared to £13,374 for the petrol.
So the answer is simple, if you want a cheaper car to run and don't mind offsetting your savings for a while, you should look at low-emission diesel cars which will be cheaper to run, and enjoy a higher resale value when you decide it's time for something new. For help with financing a new car, check out our other guides.