For the past six months or more, we have included a three-year running cost table with each car test report featured in the Irish Country Living motoring page. For many car owners, these figures can look frightening at first glance.

Like so many cost areas on the farm and within running a modern family household, the costs associated with owning a car or 4x4 can be unpalatable to say the least. But that does not mean that we should not examine these costs closely and regularly.

There are numerous ways to approach the issue of car ownership costs and each week we have attempted to produce a set of costs that are as close as possible to reality. That’s why we produce the three-year running costs on each car based on real data available under the headings that you see in the paper each week.

These headings are:

  • Depreciation.
  • Insurance.
  • Servicing.
  • Road tax.
  • Fuel costs.
  • More recently, I’ve had a few queries on the tables and some readers felt that the costs were inflated and were not close to the actual costs of owning a car in 2016. Most of the comments are saying that the figures are far too high, that nobody could afford to own a car or 4x4 based on these costs. So here we look more closely at the numbers and explain the basis for them.

    Depreciation

    For most drivers, this figure is the most difficult to believe, mainly because it’s the biggest figure in terms of car ownership costs. The figure we use is based on the prices quoted for three-year-old cars of a similar spec to the car being tested. We trawl through two prominent motor sales websites, carzone.ie and donedeal.ie to get the prices of three-year-old cars of the same make and model.

    When you look at the prices quoted – and we usually choose between five and eight models depending on what’s on offer – there can be significant differences. We then average the prices quoted, many of which are the asking price rather than the selling price, to get the average value for a similar three-year-old car. We then subtract that price from the cost of the new model being reported on.

    This gives a good idea of the depreciation level – in other words, the loss in the value of the car over three years, or the cost to change it. And whatever way you look at this, it is the real cost of depreciation.

    Try going into your local dealer on a trade-in and see if the figures are anywhere different, and you’ll probably end up having to part with similar money to the figure that we quote in terms of depreciation cost.

    Insurance

    For the three-year insurance costs, we get an actual annual insurance quote for the type of vehicle from a reputable insurance company. This is based on a 35-year-old farmer driver and wife living in rural Ireland and with a full no claims bonus for the specific car value. We then multiply this by three to get the three-year insurance cost, provided there are no claims in the meantime.

    Servicing

    Many of the car models and the brand dealers have different servicing intervals for respective models. Some of the 4x4s have a shorter service interval than smaller cars.

    Most are on a minimum of a once-a-year service, so over a three-year period there will be a minimum of three services.

    What we find is that the first year service is typically not too expensive, while the second one requires more filter changes and is often close to double that cost. The third service is often quoted as being the same as the first, provided there are not other major wear issues, such as tyres, involved.

    To establish the actual service costs for each model, we ring a rural-based dealer for the respective brand and get the three-year or 45,000km service requirements and costs. We then quote these directly by adding the three service interval costs together based on actual figures.

    Road tax

    This is the easiest of the costs to establish as it is based on the CO2 or commercial tax. Just multiply it by three and hope that the next Minister for Finance won’t increase the rates in a future budget.

    Fuel costs

    To establish the three-year fuel costs, we take the official quoted fuel economy figure from the car company and convert it to actual litres of fuel consumed over 45,000km. We are taking a usage level of 15,000km/year, which may well be low for many rural users who need a car or 4x4 for every journey.

    We then divide the fuel economy figure in terms of kilometres per litre into 45,000km as this is the figure used to give the total fuel consumption in litres over three years. Multiply that by the current cost of diesel/petrol at the pumps and you get the three-year fuel costs.

    There are significant differences in the fuel costs between larger 4x4s and average family cars with thrifty diesel engines. When the car or 4x4 is being used to tow a trailer, the fuel economy figures will soar, but in this comparison we don’t take that situation into account.

    Total costs

    We add up all of these cost component figures and divide them by the 45,000km nominal distance travelled over three years and this in turn gives us a cost figure per kilometre used and a total three-year ownership cost. And that’s the frightening bit, which is as close as possible to real ownership costs as you can get.

    There may be other ways to calculate the running costs and a method similar to what I’ve described above is used by some specialist magazines and consultants in the UK. I understand that the depreciation issue is the big, if not outrageous, cost. Many drivers may differ on this and will have their views but it is a reality.

    Some motor dealers use an industry only guidebook which is not available to the public and its figures are also based on surveys of websites and motor dealer stocks. As we use the same sources for the depreciation information each week, in other words the quoted prices on two of the most popular motoring sales websites, we are satisfied to use this information as a reliable source of values.

    Please also remember that prices quoted in websites are often the asking price, not the real selling price, so they may be slightly overstated.

    Assessing the three-year ownership of a modern car so that Irish Farmers Journal readers can understand and appreciate takes some effort and time to get an accurate and reliable result for our readers. Like all aspects of modern life, you need to get good information to make the best decisions, especially decisions that involve a significant longer term investment.

    Car ownership cost figures are rarely if ever quoted in other Irish motor test report columns. This is part of the practical and valuable service that the Irish Farmers Journal brings to its readers across all aspects of farming, living and working in rural Ireland.

    We all know that when it comes to cars and 4x4s, the day you buy is the day that you sell. We need to ensure that you are informed with the best information to make the best car buying decisions for you and your farming business. Armed with reliable information, we can support you in making the best decisions.

    To read the full Motoring Focus click here.