Got two cars in the drive? You’ll save a small fortune by ditching one of them. With about one in three of us now working from home for part of the week, owning two cars, or even one, may no longer add up.
Some 79 per cent of households in Ireland have at least one vehicle, according to Central Statistic Office (CSO) figures for 2020. In work-from-home households, these vehicles are spending more time parked in the drive than ever before. Before blindly renewing your tax and insurance this year, it’s worth weighing up the cost of car ownership.
Count the cost
The annual cost of running a family car is some €10,386, according to a 2019 motoring costs survey by AA Ireland. That’s a big chunk of the household budget. Indeed housing, food and transport account for 61 per cent of household expenditure in the EU, according to Eurostat figures. Spending on shelter and food is essential, but car ownership is coming under increasing scrutiny.
Those living where public transport, cycling or walking routes are inadequate may feel they don’t have a choice but to run at least one car. For some families, the cost and availability of student accommodation means buying their offspring a car for the college commute. For urban dwellers, the arguments for car ownership centre on disjointed public transport, doing “the big shop”, going on day trips, weekends away or moving stuff.
No matter where you live, spending money on taxis, grocery delivery or a car sharing service can seem extravagant. The real extravagance however may be spending €10,386 a year on a vehicle you use a few times a week.
With costs spread throughout the year, many of us have become inured to the financial outlay on motor tax, insurance, fuel, servicing, repairs, replacement tyres, NCT, depreciation and parking. Break it down and it amounts to about €200 a week or €865 a month – that’s per car.
Depreciation is the silent financial drain. A new car loses value as soon as you drive it off the forecourt and by the end of the first year, you will have lost about 40 per cent of its value, says the AA.
What are the alternatives?
Almost 60 per cent of car journeys are 15 minutes or less, according to CSO figures from 2019. Work and shopping were our main journeys, accounting for 23.6 per cent and 21.3 per cent respectively.
Ditch a car and there’s a lot you could do with the extra cash, even after paying for grocery delivery, using taxis when you need them and spending on a car sharing service a few times a month.
Need to do a big shop? For a subscription of €15 a month for three months, Tesco delivers the next day, provided your grocery spend is at least €50. Impatient southsiders in Dublin living within 10km of Dunnes’ flagship store in Cornelscourt can have €50 or more of groceries delivered within four hours for free.
If you need to get to an appointment across town, a taxi is an option, though investing in a bike or E-bike is more cost effective in the long run. E-bikes offer pedal-assisted cycling up to speeds of about 25km/h making it easier to travel farther. You don’t need tax and insurance and there are no parking fees or speeding fines. There will be more e-bikes sold in Europe by 2030 than cars, according to projections from the Confederation of the European Bicycle Industry.
Use the Bike to Work scheme and your employer pays up to €3,000 for cargo and e-cargo bikes, €1,500 for pedelecs and e-bikes and €1,250 for other bicycles.
You repay the cost in instalments and you save because your repayments come out of your salary before tax, USC and PRSI are deducted. This means that someone on the highest rate of tax will save almost half of the cost of a new bike and equipment.
Taking a day trip to the beach? You don’t need to own a car to do it. Using a car sharing service such as GoCar, you can do a round trip from Dublin 4 to Brittas Bay in a Hyundai i30 on the first day of the school holidays for €76, including fuel. That’s picking up the car from any of multiple parking spots at 10am and dropping it back at 7pm. That should give you enough time to squeeze in a visit to the cousins and do your weekly shop on the return leg. There’s a phone app and the car key is in the glovebox so you don’t even have to do chats.
Indeed, you could do 10 and a half trips like that a month for the same monthly cost as owning a car. Let someone else worry about the tax, insurance, servicing and NCT. There’s free parking too in any Dublin City Council pay and display space.
Car sharing services charge an hourly rate or a daily rate. A car like a Hyundai i30 will cost you €11 an hour or €60 a day. The first 50km of fuel is included free with additional distances charged at €0.50/km, reducing to €0.20/km if your trip is six hours or longer.
What about my insurance?
Households thinking of reducing from two cars down to one can think it will negatively impact one of the driver’s insurance standing – it won’t.
Typically in a two-car household both members have “main driver” status on their respective policies with individual no claims bonus records. You probably have “named driver” cover on each other’s policies too.
You might think you need to keep two cars with main driver insurance policies going in order to maintain your no claims bonus – you don’t. You can be a named driver only and keep your no-claims bonus, provided you swap main driver status with your partner or spouse every two years.
The average cost of car insurance in Ireland in 2022 was €578, according to Central Bank of Ireland figures. By switching to one car and one insurance policy only, you keep that money in your pocket.
When you finish your two-year stint as the main driver, be sure to ask your insurance provider for written proof of your no claims record. Keep this on file.
If you need to borrow your mother-in-law’s car now and then, there’s a solution for that too. “Policyholders over the age of 25 can add third party cover as an extension of their policy which allows them to drive other cars besides their own,” says Justyna Banasik, technical product manager with Allianz Ireland. This can cost as little as €4.
Where both partners use the car for business purposes, they can combine Class 1 and Class 2 business use on the policy which insures you for annual business mileage up to 10,000km.
Try it out
Some of us hang on to that second car, “just in case”. What if you get rid of it, but then your work circumstances change and you need a second car again? You’ll be facing the legwork and cost of buying another vehicle and used cars are getting more expensive.
If you want to try out living with one car, or none, you can take your vehicle temporarily off the road. You don’t have to pay motor tax for that period but you must submit a declaration of non-use form to the motor tax office saying your vehicle will be off the road and not in use for a period of between three and 12 months.
Personal choice
For many, owning a car or two comes down to personal choice. It won’t be that way forever.
Manufacturing and driving cars as we do is damaging the environment. Transport, after agriculture, is Ireland’s second largest CO2 emitter, according to the SEAI. Private cars are the biggest offender.
If you’re not moved by the environmental argument, you might be by the financial one. Owning a car is about to get a whole lot more expensive.
The National Transport Authority has published models for hitting Ireland’s emissions targets, including a 400 per cent increase on parking charges, a €10 daily charge for driving in cities, a 50 per cent reduction in public transportation fares and a lowering of all national road speed limits.
Manufacturers will try to persuade you that the car you drive says a lot about you. When it comes to financial and environmental nous, not having one at all is starting to speak volumes.
You can contact us at OnTheMoney@irishtimes.com with personal finance questions you would like to see us address. If you missed last week’s newsletter, you can read it here.
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