YOUNG DRIVERS INDEXFEBRUARY 2017

A bi-annual vehicle maintenance index for young people by

P

Key Statistics

Annual cost of running a car rises 4.2% to £2,397 in the past six months, which is

almost £200 higher than March 2016

Fuel costs shot up by £140 (19%) over the last year

Average insurance for 17-24 year olds jumped again by 3.9% to £1,306 – accounts for more

than half of a young driver’s first year running costs

Young Drivers: The annual cost of running a car

2

The cost of running a car for young

drivers has hit record levels again,

edging closer to the £2,500 mark. Now

standing at £2,397, the cost of running

a car for young drivers rose by 4.2%

compared to the last Young Drivers

report, which was released in September

2016. The report, which analyses costs

for insurance, fuel, taxes, MOT, general

maintenance and breakdown cover,

found that for drivers between the

ages of 17-24, expenses have risen by

almost £100.

Additional analysis found that the cost of

running a car for young drivers equates

to 15.5% of their after-tax income, before

the cost of purchasing a car. The huge

costs, combined with lower wages of

17-24 year old’s has meant that the

number of younger people getting on

the road has declined steadily over the

past five years, from 2.88 million in 2012

to just over 2.7 million in 2016.

The biggest cause of the rise in running

costs has been the resurgence in the

price of oil over the past year, which

led to a year on year jump in petrol

costs of £140 or 19% . The analysis of

fuel costs, which is based on average

annual mileage and the cost of premium

unleaded petrol, found that in the past

six months, the average cost of fuel had

risen by over £50.

Cost Feb-17 Sep-16 Feb-16 Cost difference % Change (Feb 17/Sep 16) (Feb 17/Sep 16)

Insurance £1,306.55 £1,257.35 £1,246.54 £49.20 3.91%

Fuel £880.34 £828.56 £739.68 £51.78 6.25%

Est. VED (Road Tax) £110.00 £110.00 £110.00 £0.00 0.00%

MOT £54.85 £54.85 £54.85 £0.00 0.00%

Breakdown cover £45.32 £48.76 £50.00 -£3.44 -7.05%

Total cost per year £2,397.06 £2,299.52 £2,201.07 £97.54 4.24%

Cost of running a car (17 - 24 year olds)

1 Sourced from Gov.uk

3

Insurance | £1,306

MOT | £54.85

Fuel | £880.34

Breakdown Cover | £45.32

Est. VED (Road Tax) | £110

Despite the huge rise in fuel prices, insurance remains the most significant cost for young drivers, rising by 3.9% over the past six

months, to an average cost of £1,306 per year, equating to an increase of £49. The third hike in Insurance Premium Tax (IPT) will

likely have added to the continued rise in car cover cost, as the tax is priced in by insurers ahead of implementation in June 2017.

Younger motorists are now spending almost 2.5x more than the average driver on insurance, due to the higher perceived risks

associated with insuring the younger generation on the road.

These figures show that buying a car is only half the struggle when it comes to getting

on the road. While young people may save up for years to purchase a car, it is likely

that they will need to save for a similar amount of time to afford the first year’s

running costs. It is therefore no surprise that the number of driving licenses for 17-24

year old has steadily declined over the past five years. Many of the younger generation

simply cannot afford to shell out almost £2,400 to get on the road without support

from their parents. However, these excessive costs will likely be unavoidable for some

who require a car to get to work

“

“

Simon McCulloch, Director of Insurance, comparethemarket.com

The seemingly unrelenting rise in the

cost of motor insurance has rapidly

continued, with average premiums for

17-24 year olds rising by 3.9% to £1,306

in the past six months. On an annual

basis, premiums have risen by 4.8%,

or £60, as the IPT hikes began to take

full effect.

The cheapest premiums on the market

for young drivers have also continued

to increase over the past six months,

averaging £1,040 over the period

and reaching a new high of £1,076 in

December 2016. The cheapest premiums

have risen by £35 since the last Young

Drivers report – when the average

cheapest premium stood at £1,005 –

breaking the £1000 mark for the first

time.

The good news is that there are

still significant savings available to

consumers who take the time to shop

around for car insurance. The difference

between the average premium and the

cheapest average premium now stands

at £265, an increase of £15 compared to

the last report.

IPT has risen three times in successive

budgetary statements, ballooning in

the past year and a half from 6% to 12%

(from June 2017), significantly adding

to the cost of insurance as it’s likely the

insurers price in the latest 2% rise in the

lead up to implementation in June 2017.

These rises are disproportionately hitting

young people, as the tax is based on the

total value of policies, which is typically

highest among the younger generation.

4

The cost of insurance to young drivers

Key Statistics

17-24 year olds paying an average of £1,306 for car insurance each year – accounting for 54.5%

of the total cost of running a car

Premiums for this age group shot up by 4.8% in the past year adding around £60 to every policy

Young drivers could reduce insurance costs by £265 on average by shopping around

Age group Average premium

17-24 £1,306.55

25+ £540.67

Difference £765.88

2 The shop around saving is based on the difference between the cheapest click-through price presented and the mean average of the top five

cheapest prices presented to a customer, where a consumer has clicked through to buy.

5

As the single greatest cost that young drivers face, car insurance represents a

serious barrier to getting on the road. There is little doubt that rising insurance

costs have contributed in some way to the decline of young drivers. However, for

those determined to overcome these costs, there are a number of options that can

dramatically reduce the bills. The average 17-24-year-old could save around £265 on

car insurance if they were to switch to the cheapest deal available to them. Although

it is not a silver bullet, the savings would go a long way to making driving more

accessible for many.

“

“

Simon McCulloch, Director of Insurance, comparethemarket.com

Shop around price Average price Saving

£1,040.91 1,306.55 £265.64

Motor insurance premiums for 17-24 year old drivers (Six months to February 2017)

Changes in motor insurance premiums for 17-24 year old drivers since September 2012

Average premium - age 17-24 Average cheapest - age 17-24

£16,00

£1,400

£1,200

£10,00

£800

£600

£400

£200

£0

Sep

12

Dec

12

Mar

13

Jun

13

Sep

13

Dec

13

Mar

14

Jun

14

Sep

14

Dec

14

Mar

15

Jun

15

Sep

15

Dec

15

Mar

16

Jun

16

Sep

16

Dec

16

6

What is the best car for your budget?

Key Statistics

Young drivers spent an average of £3,505.58 on their cars over the past six months

17-24 year olds could save an average of £331 on insurance by choosing different cars

Vauxhall Corsa kept the top spot as the most popular car for drivers aged 17-24 years old

Fiat 500 is the only car to make both the list of most popular cars and the cheapest cars to insure

The average value of the top ten most

popular cars amongst young drivers

rose significantly in the six months to

January 2017, according to analysis by

comparethemarket.com. The average

price of the most popular cars was

£3,505 compared to £1,757 six months

ago.

The Vauxhall Corsa retains the top spot

of the most popular cars for young

drivers, accounting for over 13% of

enquiries and costing an average of

£3,110. The Vauxhall Corsa is also

slightly cheaper to insure than the

average car, with an average premium of

£1,297. The Ford Fiesta came in second,

with over 10% of enquiries, costing an

average of £4,095 to buy and £1,259 to

insure. The average insurance cost for

the top ten most popular cars, which

account for more than 50% of enquiries

through comparethemarket.com, now

stands at £1,282.

The Volkswagen Up! maintains its

position on top of the list of cheapest

cars to insure, costing an average of

£905 per year, although the cost of

the car is a lot more expensive than

the most popular cars with an average

value of £5,687. The Skoda Citigo came

in second with an average cost of £908

per year.

The Fiat 500 was third on the list of

cheapest cars to insure with an average

annual cost of £919 and was the only

car to make both the list of most

popular cars and the cheapest to insure.

However, the Fiat 500 was significantly

more expensive than the rest of the cars

on the list, costing an average of £6,072.

Although not a common consideration when buying a car, savvy consumers could

find themselves saving hundreds on insurance by choosing certain cars. With the

top ten most popular cars costing an average of £1,282 and the average of the top

ten cheapest cars to insure costing £951, there is clearly some value in considering

insurance when buying a car. Equally, young, new car buyers should take the time to

shop around for a policy that both fits their needs and saves them money

“ “

Simon McCulloch, Director of Insurance, comparethemarket.com

7

Make Model % Enquiries Avg Premium Avg Vehicle Value

Vauxhall Corsa 13.27% £1,297.61 £3,110.46

Ford Fiesta 10.43% £1,259.69 £4,095.77

Volkswagen Polo 5.45% £1,253.94 £4,078.74

Renault Clio 5.14% £1,242.18 £2,107.76

Vauxhall Astra 4.01% £1,506.58 £3,328.60

Volkswagen Golf 3.50% £1,557.93 £4,855.99

Ford Ka 3.24% £1,033.31 £1,986.38

Fiat Punto 2.73% £1,343.44 £1,554.52

Ford Focus 2.61% £1,411.02 £3,864.82

Fiat 500 2.51% £919.15 £6,072.78

Total £1,282.48 £3,505.58

Top 10 most popular cars

Make Model % Enquiries Avg Premium Avg Vehicle Value

Volkswagen Up! 0.45% £905.63 £5,687.61

Skoda Citigo 0.17% £908.78 £6,131.52

Fiat 500 2.75% £919.15 £6,072.78

Citroen C1 1.79% £948.51 £3,364.46

Toyota Aygo 1.22% £959.81 £3,993.87

Fiat Panda 0.23% £966.69 £2,139.87

Hyundai i10 0.45% £967.46 £4,748.63

Vauxhall Adam 0.75% £969.55 £8,033.33

Peugoet 107 1.23% £979.65 £2,411.11

Mazda 2 2 0.44% £986.39 £4,644.89

Total £951.16 £4,722.81

Top 10 cheapest cars

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Methodology

All data, other than that referenced

in the footnotes, is sourced from

comparethemarket.com

A young driver is defined in this research

as drivers aged between 17-24 years old.

When the average price is referred to,

this is the mean average of the top five

cheapest prices presented to a customer,

where a consumer has clicked through to

buy. Buying from the top five cheapest

prices presented, represents 90% of all

car insurance sales.

When the cheapest price is referred

to, this is the average cheapest price

presented, where a customer has clicked

through to buy.

All premium data refers to motor

insurance products featuring

comprehensive, third party fire and

theft or third party cover.