As the economy hits one bump after another, motoring has felt the full impact as car insurance, fuel prices and car tax premiums hit record costs. So much so that the price hikes could mean that the annual cost of running a car exceeds the average car's value.
According to research from uSwitch.com, just under half of cars on the UK's roads are more than five years old, with an average cost of £4,227. And, according to the study, the cost of running a car could soon exceed this, estimated to reach £3,800 in 2009.
The cost of petrol is predicted to double from £1.17p per litre during 2008 to a massive £2.30 a litre in 2009 as the price of oil soars. Couple this with new car tax bands due to take effect soon and rising car insurance
premiums, and the annual costs are not far off the price of the average car.
According to the research, it is fuel that will cause the most financial problems as British motorists have already seen a 33 per cent rise in the cost of filling the average fuel tank since 2007.
As a result, uSwitch.com is predicting that millions of motorists will soon be facing a situation where it will cost more to keep their car on the road than it is actually worth. Consequently, if fuel rises to its forecasted £2.30 a litre, 'negative equity' will not just be affecting home owners.
Ann Robinson, director of consumer policy at uSwitch.com, said: "We are heading towards a situation where motorists are going to be priced off the roads. At £2.30 per litre a driver's annual spend on petrol will soar by almost £2,000. Drivers are going to need to contend with rising insurance premiums and increased road tax as announced in the Budget.
"As a direct result of these price hikes, motorists are going to be forced to think carefully about when, where or even if they use their cars. For some there are other options like public transport, but many do not have a choice."
She continued, "Those in rural communities, the elderly and lower income families will really suffer – don't forget that for many of these a car is a lifeline and their quality of life will suffer if they are unable to afford to use it. Some drivers will be held to ransom over spiralling costs, but I fear that many others will have no choice but to give up their car altogether."
To combat the soaring costs, uSwitch.com offered tips to keep costs down, such as driving smoothly, using gears wisely and travelling lightly to cut fuel costs. And, as car insurance premiums rise it is more important than ever to shop around and compare car insurance quotes
before settling for a deal.