Depreciation, not fuel economy, is the real cash killer

Photo ack: which.co.uk
Photo ack: which.co.uk

Those of us who focus on fuel economy when buying a brand new car are wasting our time and money apparently.

The real cash-killer is depreciation according to experts in this field CAP Automotive.

Consumer research consistently encourages us to consider the cost of filling up with fuel. But choosing a car that holds its value delivers much bigger savings over time than fuel efficiency alone.

According to CAP’s unique car ownership cost figures, the average cash value lost by the typical medium family car bought 3 years ago is £12,559 – and rising.

Less presumably the discount you negotiated at the time of sale?

Whereas the same cars, driven 12,000 miles a year, have only burned an average of £4,000 in fuel.

Ford of Europe's Easy Fuel SystemUsing this example CAP suggests that depreciation has cost the typical motorist 3 times as much as they have spent at the pumps.

“The problem is that motorists think there is nothing they can do about depreciation” said Philip Nothard, CAP’s Retail & Consumer expert.

According to CAP’s free ‘Total Cost of Motoring’ calculator the total expenditure on fuel over 3 years for a typical medium family car ranges from around £1,600 for a super-efficient hybrid to around £5,700 for a performance coupe in the same ‘lower medium’ car sector.

But depreciation in the same sector ranges from about £8,000 over 3 years for one car that delivers standard mpg to more than £23,000 for a car that boasts unbeatable fuel economy.

For example CAP figures reveal that the least thirsty plug-in hybrid costs around £1,500 at the pumps over 36,000 miles. In contrast, a standard-engine Ford Mondeo 1.6 Graphite costs much more to fill up, at £5,000 over the same distance.

This means the Mondeo owner will only lose about £10,000 in depreciation over 3 years while she who diligently saved at the pumps in her expensive hybrid will wave goodbye to a whopping £34,000 when she comes to sell or trade her car in.

Sound advice we say. In a nutshell it makes sense to put depreciation on your new car buying homework list, especially when CAP’s ‘Total Cost of Motoring’ tool is free to use at their website. Alternatively if you buy a used car that’s more than 3 years old, someone else has likely paid the depreciation, so we’re back to looking keenly at mpg, VED and insurance groups to save a welcome bob or two.