Fuel, tax, insurance, servicing and NCTs. Car costs can place a serious dent in the family finances each year, and these costs continue to rise. Now, a family with a band C car, which would be one of the two most popular bands for cars purchased by Irish families, are looking at costs that are over €650 more expensive than that in 2010.

Figures provided by AA Ireland show that the price of running a band C car was €11,171 in 2010. However, figures released in September 2014 show that consumers could now be faced with costs as high as €11,849.

Fuel Prices

Fuel prices are certainly one of the most influential factors that consumers need to consider in the running costs of their car. However, because the price you’re dealing with at the pump is presented in cents, it can be difficult to assess the overall impact it has.

Conor Faughnan, director of consumer affairs with AA Ireland, says over the course of a year it can be the biggest impact on your pocket.

“Consider that a driver who is doing ordinary mileage pays in excess of €2,000 a year just on tax that is charged on fuel.”

Certainly, Government taxes have had the biggest impact on the price at the pump since 2008, despite massive fluctuations in the price of oil. Conor explains more.

“In the aftermath of the financial crisis, two things happened. The global oil price collapsed from $150 per barrel to a low of $33 per barrel. However, from 2008 to 2011, the Irish Government applied five separate tax increases to petrol and diesel. So basically the price of the oil was going down, but our taxes went up.”

In 2010, oil stabilised at about $110 per barrel and stayed around that price for nearly four years, but the price plummeted again in July of last year, down to $48 per barrel. As a result, consumers were getting better prices at the pump, but because of the amount of taxes now on our fuel it wasn’t relative to the overall drop in oil prices.

Prices reached a noticeable low in January 2015. Irish Country Living reported prices of 113.9c/litre in Cork, while diesel dipped to 118.9c/litre in Tullamore.

“At the moment, we’re looking at rates of about 140c/litre for petrol, but if consumers weren’t affected by the taxes that could be as low as 116c/litre. Diesel is averaging at 130.5c/litre, but, again, without the taxes we would only be paying about 107c/litre. Overall, the taxes have added about 23c to the price of both fuels at the pump,” Conor says.

Car Taxes

Car sales are certainly seeing a resurgence. We are not at the levels of pre-2008, but those that are buying are opting for efficient, low-emission cars due to lower car tax prices. Although there was no increase in car tax in the 2015 budget, consumers did see a consistent increase in car tax in the years running up to that.

The biggest increase since 2012 was for those who own cars in band G. While they were forced to fork out €2,100 per year on tax in 2012, that rose to €2,350 in 2014, an increase of 11%. Similarly, those in band F faced an increase of €150, a rise of 14% during the same time period.

Fortunately though, such increases only affect a minority of customers as there are so few band G cars now on the road.

Band B is now considered to be the most popular average family car, but consumers still faced increases of €114 on their tax since 2012. Those in band A saw very little increase, however, just a difference of €16, rising from €104 in 2012 to €120 in 2014.

Insurance

As the biggest lump sum fee, the price of car insurance is the expenditure that many consumers are most concerned with. This market is currently going through a state of flux, but it has been relatively stable for the past few years.

“Car insurance has been a relatively good news story for many consumers over the past three or four years,” says Conor Faughnan.

“The EU ruling in gender equalisation in 2012 had a significant effect on young female drivers as prices fell for young male drivers. But apart from that, policies stayed relatively stable for many families as it was a period of intense competition. In fact, a lot of consumers were even able to get reductions year on year by switching providers.”

This was confirmed by Jonathan Hehir, managing director of www.coverinaclick.ie, an insurance broker which represents companies including AXA, Aviva and Liberty Insurance. Irish Country Living requested figures from Jonathan regarding car insurance increases, but despite researching 30 different profiles, there were no significantly steep increases visible. However, it is understood this stability is set to change, and has done so already. Anecdotal feedback from readers has shown that many are starting to see steep increases when renewing car and van insurance this year.

“In reality, we have had an unstable market which has experienced under-pricing and that is not beneficial for anybody in the long run,” explains Conor Faughnan. “When Quinn arrived as a new player in the insurance market, they succeeded in gaining a lot of customers, but they didn’t have sufficient reserves and consequently went broke. As 5% of all insurance policies are reserved for such a scenario, we are all now picking up the tab on this. Instead, we need a sustainable and steady insurance market. Nobody wants to see prices going up, but it is better overall in the long run.”

Jonathan Hehir also observed that some insurance companies have already started to implement these price increases. In the long term it is expected many will follow suit.

Taxes at the pump

  • • October 2008 – 8c/litre added to excise duty on petrol.
  • • April 2009 – 5c/litre added to excise duty on diesel.
  • • December 2009 – Carbon tax: 4.2c/litre on petrol and 4.9c/litre on diesel.
  • • December 2010 – 4c/litre on petrol and 2c/litre on diesel added to excise duty.
  • • December 2011 – Carbon tax was increased by 33% (from €15/tonne to €20/tonne), which including VAT is 1.4c/litre on petrol and 1.6c/litre on diesel.
  • • December 2011 – Vat increased from 21% to 23%.