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Running Costs
What does it cost to run a vehicle? Below we have some answers for you and a flash quiz you can navigate to at the bottom of the page. RAC has calculated how much it costs to operate a vehicle after taking into account Western Australian conditions. The calculations include depreciation, which is sometimes overlooked. A section on private vehicle reimbursement rates has also been included. Vehicle operating costs are calculated over the first five years and are based on a driving distance of 15000 kms per year in private use.
Calculation criteriaThe costs of purchasing and operating a motor vehicle can be divided into fixed costs and running costs. Fixed costs represent the standing and purchasing costs of a car. These costs are incurred through "ownership" of the vehicle and are expressed as dollars per week. Fixed costs do not directly depend on how much the vehicle is used and are:
Running costs are those costs, which vary according to the use of the vehicle and include:
Fundamental assumptionsThe following assumptions have been used in calculating the running costs:
Vehicle selection
DepreciationDepreciation is calculated as the difference between the on road cost of a new car, and the trade in value after 5 years and 75,000 km. The trade in value is the predicted trade in value of the vehicle in average condition as determined by Glass's Future Values. The on-road cost of the new vehicle is estimated as follows:
Financing costsLoan repayments are used to attach a cost to the money used to purchase the vehicle. Loan repayments are used in preference to calculating an oppurtunity cost as the majority of people finance their vehicle rather than pay cash for it. RAC found that the most common loan used on a vehicle (through RAC Finance) was a 100% loan amortized over a five year period. The calculation of the cost of financing the car is based on the following assumptions:
Registration, Comprehensive Insurance and Club MembershipThe cost of registering a vehicle in Western Australia (per annum) includes:
Comprehensive insurance costs (per annum) have been determined using RACWA comprehensive car insurance premiums and the following parameters:
Variable costsVariable costs represent the running costs of a car that vary with the number of kilometres driven. Variable costs are expressed in cents per kilometre. Fuel costsThe fuel price used is the Perth metropolitan average price as determined by RACWA for the period 1st November 2004 to the 30th April 2005 from Fuelwatch data published by the WA State Government. The prices used are:
Fuel consumption data is taken directly from the Green Vehicle Guide (http://www.greenvehicleguide.gov.au/) published by the Federal Department of Transport and Regional Services. Tyre costsTyre costs are estimated using the following assumptions:
The replacement cost will be quoted at the recommended retail price (e.g. no sale prices) on the most suitable replacement tyre in this order of preference:
Service and repairsThis will comprise two costs, the cost associated with regular servicing and the cost associated with unscheduled servicing and repairs. Regular service costs including GST are calculated using manufacturers recommended service schedules including a range of original equipment replacement parts. Unscheduled servicing and repairs will incorporate a range of replacement parts considered appropriate for normal driving conditions and assumed annual distance, with replacement parts cost including the GST. Labour hours have been estimated from the VACC times guide.
Click here to see the RAC vehicle operating costs for your vehicle. Please click the link below to do the running cost quiz
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