Rising Cost of Motoring Reducing Vehicle Use

Posted 2008-04-30

A recent report by the independent financial comparison site, MoneyExpert.com, has revealed that a combination of rising insurance premiums, higher petrol prices and general car and van maintenance costs are forcing more and more motorists off UK roads.

The report reveals that around a quarter of vehicle owners now claim that they use their car or van less because of the overall increase in the cost of simply running a vehicle, with 29% of drivers aged 55 or over claiming to have used their car or van far less in the past year because of soaring costs.

The report cites petrol price rises as the chief cause of cutting back on vehicle usage (76%), with rising van and car insurance premiums and higher maintenance costs combining to poll 16% as the secondary cause of reduced road use.

With the current price of unleaded fuel now standing at an average of 107.5p a litre in the UK, and reaching highs of £118.9p in certain parts of the country, increasing numbers of motorists are now finding themselves unable to use their vehicles as freely as they had in the past, as they struggle to contend with the rising prices.

Neither is the situation likely to improve in the foreseeable future as the Chancellor, Alistair Darling has already announced in this year’s budget that fuel duty on larger engined ‘gas guzzlers’ will effectively increase by half a pence a litre from 2010, and fuel duty is due to rise by a further 2p per litre from next October.

As the current credit crunch begins to affect more and more consumers, motorists have also seen some car insurance premiums rise steeply, with the average comprehensive car insurance policy now reaching £629.04.

MoneyExpert.com spokesman Sean Gardner commented on the situation: “Many people are finding their finances being squeezed to the limit, and for some motorists that now means having to leave the car at home and take public transport or cycle to work, simply because motoring has become too expensive.”

“The cost of petrol is high, but the single largest outlay for the motorist is the insurance premium.”
Mr Gardner further suggested: “The only way to minimise the damage is to shop ‘til you drop in order to find the best possible insurance deal.”

In fact the most recent figures from MoneyExpert.com’s independent Switching Monitoring Index indicates that 4.9million vehicle owners have already done just that, having switched car insurance policy providers within the last six months.

But motoring is not, of course, the only area to be hit hard by the latest effects of the continuing credit crunch, with the impact on property investment and the housing market also spreading down to cash-strapped consumers.

According to a very recent report released by Savills, the estate agent, house prices could continue fall by as much as 25% if the crunch persists. This follows on from a 10% decline in the housing market already this year, and a predictive fall of 15% in 2009.

Savill’s forecast coincides with the latest figures released from the property data business, Hometrack, indicating that house and property prices have already dropped another 0.6% in the past month alone, making this the seventh consecutive fall and causing the inevitable impact on property investment in general.

However, there was a cautionary note of optimism from Yolande Barnes, Savill’s director of residential research, who indicated that if home loans were to become more freely available soon, prices could begin to stabilise to a mere 4% lower by the end of the year and could ease by another 2% by 2009. However, she warned, there could be even greater difficulties if the banks did not end the drought on mortgages very soon.

With so many of the usual options for refinancing currently imposing barriers and tighter restrictions, so far this year the numbers of consumers forced into taking out Debt Management Plans (DMPs) or Individual Voluntary Arrangements (IVAs) rose to 800,000 in 2008, double that of the previous year.

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