Donal Byrnehas been finding out the real costs, and why the ordinary motorist is so often caught between the dealers and the makers.
If the old adage that property is all about location, location, location is true, then cost-conscious motorists should begin to heed the advice of the motor experts that buying a car is all about depreciation.
Everyone knows that the value of a car depreciates the minute you drive off the forecourt, but by how much has always been a guessing game for those of us not privy to the mysteries of car valuation. Ten years ago many people thought it smart to buy a car, keep it well maintained and then trade it in after three years, or in some cases two years.
Anyone who has tried that same approach in recent years has seen the gulf widening and the price they have to pay on top of their trade-in increasing significantly. That is mainly due to a glut of second-hand cars and tighter margins in the industry.
The loyal buyer tends to get squeezed in many cases. Depreciation has emerged as a huge issue for new car buyers, as have the actual cumulative costs of running a car these days.
Data adjusted for private buyers suggests that the cost per kilometre of running a large car - bought new and run for three years with an average mileage of 24,000 kilometres - is greater than any of us might have expected.
One major leasing company in Dublin says it now costs 84 cent per kilometre to run a leased Volvo S80 with a 2.5 turbo petrol engine. The same company, Merrion Fleet, estimates that it costs just 26 cent a kilometre to run a 1.2-litre Volkswagen Polo.
"People usually look at the purchase price of the car and then look at the repayments. What they overlook is the drop in value of the car during their term of ownership, and that can be up to €15,000 on a car that cost €30,000," says David Wilkinson, sales director of Merrion Fleet, Sandyford, Dublin.
His company forensically examines its total costs on leasing cars and includes everything from purchase price, discounts, the price of fuel, delivery charges, monthly lease rates (in effect, the cost of depreciation), monthly maintenance, road tax, and the cost of options such as metallic paint.
In our accompanying chart, adjusted for private buyers, owners of some of the most popular cars on the Irish market can look at these costs and also discover how much their cars are worth in the trade after three years and 60,000-odd kilometres. The results are very surprising in some cases.
A Volkswagen Passat 1.6 petrol costs €27,040 new, but after three years and the above average mileage is worth €13,800 in the trade. A Peugeot 407 costing €27,335 is worth €9,200 in the trade.
You won't, however, be able to pick up a car like this for a snip because lease companies sell on into the trade, where another layer of profit is added.
"Some people see a car for sale in a garage for maybe €15,000 and think they can sell their own similar car for the same price. What they forget is the trade valuation and profit margin. They won't get anything like that from a trade buyer," says Wilkinson.
The cost per kilometre figure is an illuminating one. Lease companies are calculating total costs (the price someone pays through a finance deal to buy their car is more than bank charges) for small cars at about 32 cent per kilometre and 1.4-litre cars at up to 40 cent a kilometre. "It is difficult for ordinary buyers to work out the real costs and it is a complicated business," Wilkinson concedes.
Leasing, however, is not for everyone, and the individual will not easily warm to the fact that he or she owns nothing at the end of the lease period.
If a car has significantly higher mileage a charge of 6 cent per kilometre is not an unusual penalty and cars with damage will also attract a penalty payment. For companies, however, it is usually a straightforward exercise in costs with no cars to sell at the end of a period.