Motorists and the cost of living – are you paying more to run your car?

As the cost-of-living crisis continues, it seems we’re paying more and more for both essential and discretionary costs. One thing which could be classed as both, is the cost of travel. Online Betting Guide (OLBG) have conducted research in this area, producing their Discretionary Spend Index.
They looked at the spend per year per UK adult, and compared the changes between 2019/2020 and 2021/2022.

Across 12 spending categories explored in the Index, transport takes the third spot for the highest spending rise this year. With our cars being a huge contributor to this figure, where and how are we spending the cash on our cars? And is it costing us more each year? Read on to find out more.

2019/2020 vs 2021/2022
According to OLBG’s Index, we spent a pretty impressive £2,047 on transport in 2019/2020, which included both owned motors and public transport. This has risen to a staggering £3,258 over the following years, and accounts for 59% of our average annual disposable income. Looking into this in more detail, OLBG reveals public transport spend grew by 63.33% between 2019 and 2021. Whereas the cost of running a car increased by 55% over the same period, with OLBG stating these have accelerated from £1,944 per year to £3,556 this year.

Fuel prices
Unsurprisingly, the rising cost of running our motors can be attributed to record-high fuel prices.
Despite the fact most retailers have passed on a 5p fuel duty cut to motorists, on average, it’s costing Brits £1.91 per litre for petrol, with diesel even higher at £1.99 per litre (at the time of writing). Over the past year alone, petrol prices have risen by 45.6%! For the average family car, this means a cost of over £100 just to fill up.
There are several factors which have contributed to the rise in fuel costs, such as the war in Ukraine having a major impact on the price of crude oil. There’s also been a growing gap between the price of crude oil compared to refined petrol and diesel, with the difference between the two increasing from 10p to nearly 35p per litre.

Cost of car insurance
How much it costs to insure your car depends on a variety of factors, including:
• your age
• the type of car you drive
• your driving record
• where you live
• where you keep your car at night
Usually, the average cost of car insurance in the UK is just under £500 a year.
However, premiums have been on the rise over the past couple of years, and reached their highest level of an average £724 a year in 2022.

But why is this?
Firstly, insurance groups have to deal with new rules around loyalty penalties, which means insurers can no longer quote existing customers a higher price than they would a new customer.
The industry has also dealt with the rising average cost of claims, supply-chain issues for replacement parts, rising value of second-hand cars, and an increase in traffic since the pandemic, resulting in a higher number of insurance claims.

Cutting costs
There are several ways the UK could reduce travel spend.
A car may be essential to commute to work, but perhaps you could look into public transport options, cycling, or consider car sharing with a colleague.
And if you’re a household which runs multiple cars, it may be time to consider if it’s necessary to keep and pay for so many cars all under one roof.