In the first in a new series examining the ownership costs of a new car, DONAL BYRNElooks at mid-sized hatchbacks
THE AVERAGE value of a second-hand car has fallen by 25 per cent in the past year and prices are at an all-time low, according to new analysis by Dublin-based leasing company, Merrion Fleet Management. However, the survey for Motors suggests that prices are beginning to strengthen due to a shortage of second-hands caused by the collapse in the sale of new cars.
In a comprehensive analysis, Merrion has looked at the “cost of life” of a new car, paying the usual associated charges and running it for three years at 24,000km mileage a year.
This week we examine the cost of mid-sized hatchbacks.
“Overall, the cost of running a vehicle has increased this year, mainly due to the drop in second-hand values that occurred around last August when VRT and road tax charges kicked in and the economic climate changed,” says Merrion’s sales director, David Wilkinson. The drop has been in the order of 25 per cent for passenger cars and up to 50 per cent in the case of commercial vehicles.
He says it is now more important than ever to look at the whole life cost of buying a car, not simply the parchase price. Total service costs include road tax, servicing, a courtesy vehicle while a car is off the road, roadside assistance and tyres.
Since Merrion and Motors last looked at whole life costs in August, 2008, diesel prices have reduced by 28 per cent; petrol by 13 per cent.
It is important to remember that the estimated price of a car after three years is based on trade figures and not the price you might pay at a garage, where trade prices are re-set for re-sale and allow for profit. However, it does show how prices plummet in many cases when the real trade value is shown.
Diesels win in terms of cost. “They have lower C02 emissions and greater fuel economy. Since both VRT and tax are based on emissions, diesel vehicles with lower emissions are the cheapest to run,” says Wilkinson.
Another factor affecting values is the fact that some car prices have come down and manufacturers are offering new discounts. But analysis shows that these developments, too, are affecting second-hand values because residual values are based on the initial purchase price.
Merrion says the advantage of buying in the UK has narrowed significantly. “Taking into account VRT and the risks associated with imports, it is actually possible to get a car for the same price, or less, in Ireland. The current market offers exceptional value for individuals buying second-hand, unlikely to be seen again,” Wilkinson says.
The analysis is full of interesting – often predictable – facts and figures. The bigger manufacurers still have the dominant second-hand values, but even these may surprise many when you look at Merrion’s figures for the value of a car after only three years. Diesel obviously offers the best economy and value and the price of running a car per kilometre varies widely.
A Mini Cooper 1.6 diesel, for example, costs €25,350 new and is worth, according to Merrion, €10,350 after three years. A Fiat Bravo 1.6 diesel is €20,375 new, but only €4,850 after three years and a Citroën C4 1.6 diesel goes from €21,600 new, to €5,150. A Golf 1.4 petrol goes from €21,410 to €8,250 and a Ford Focus 1.4 petrol goes from €21,330 to €5,400.
And running costs per kilometre show big disparities, ranging from €0.28/km for a Skoda Fabia 1.4 diesel to €0.41/km for the Citroën C4 petrol.
Next week: the bigger family car segment