Now standing at £2,397, the cost of running a car for young drivers rose by 4.2% in the past six months.
The report, which analyses insurance, fuel, taxes, MOT, general maintenance and breakdown cover, found that for drivers between the ages of 17 – 24, drivers’ expenses have risen by almost £100 over the past six months compared to the previous six months. The biggest driver of the rise in running costs has been the continued recovery in the price of oil over the past year, which led to a year on year jump in petrol costs of £140 or 19%.
Despite the huge rise in fuel costs, 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.
To add to this, Insurance Premium Tax has been raised three times in the past 18 months from 6% to 12% (from June 17), significantly adding to the cost of insurance as insurers are likely pricing in the latest 2% rise in the lead up to implementation in June 2017, adding £72 to the motor insurance bill for young drivers. 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.
The cheapest premiums on the market for younger drivers has also continued to increase in price 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 £33 since the last Young Drivers report in August.
Simon McCulloch, Director, comparethemarket.com, said: “The changes to the Ogden rates will hit those that can least afford to run a car the hardest, with our estimates suggesting young drivers are set to pay around £107 more a year.Our report shows that buying a car is only half the struggle when it comes to getting on the road. 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 pay almost £2,400 to get on the road without parental support.
“There is little doubt that rising insurance costs have contributed in some way to the decline of young drivers. As part of his consultation process, Philip Hammond could consider exempting young drivers from insurance premium tax in next week’s budget. The worry is that the Ogden changes mean young people will either be priced off the road or will drive without insurance.
However, for those determined to overcome these costs, there are a number of options that can dramatically reduce the bills that you will need to pay. 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.”
|
