We've calculated the costs associated with operating a car in Western Australia, including depreciation. Costs are calculated during a 5 year period and based on driving 15,000 km's per year private use.
Calculation criteria
The cost of purchasing and operating a car are divided into fixed and running costs. The costs are calculated in dollars per week.
Fixed costs - incurred through 'ownership' and include registration, insurance, finance costs and depreciation.
Running costs - vary according to the use of the vehicle and include fuel, maintenance and tyres.
Fundamental assumptions
The following assumptions have been used in calculating the operating costs:
- An operating distance of 15,000 km per year over a 5 year period.
- Ownership costs are estimated using values for 2008.
- Private ownership.
- Owner is a RACWA member.
- The cost of financing a vehicle has been used (instead of the cost of capital).
Vehicle selection
A range of representative vehicles have been selected based on the following:
- A minimum top three selling cars in each class according to VFACTS sales figures.
- Running costs have been calculated for the most popular configuration within a given class.
- Cars have been limited to passenger vehicles and 4WDs. A range of light commercial vehicles have now been included.
Depreciation
Depreciation 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. On-road costs have been estimated as follows:
- List price of new vehicle (sourced from manufacturer and Glass's Information Services).
- Cost of air conditioning (where it is not standard equipment).
- Dealer delivery fee.
- Vehicle licensing costs.
- Stamp duty.
The trade-in value is based on a car in average condition as determined by Glass's Information Services.
Financing costs
Loan repayments have been used to calculate operating costs. RAC found the most common car loan (through RAC Finance) is a 100% loan over a five year period. The following assumptions have been used in calculating the cost of financing a car:
- RAC Finance car loan over $15,000 with interest at 10.75% (member rate).
- Total new vehicle cost is financed (including on-road costs).
- Monthly repayments over a five year period.
Registration
The cost of registering a vehicle in Western Australia for a year as at 30 March 2008 includes:
- Vehicle licensing fee.
- Compulsory third party injury insurance premium of $214.18.
- Recording fee of $10.65.
- GST on third party insurance of $21.42
- Stamp duty on third party insurance of $23.55.
Comprehensive insurance & RAC membership
Comprehensive yearly insurance costs have been determined using RAC Motor Insurance premiums as follows:
- No claim bonus of 55% with bonus protection.
- Private use.
- Age 35 years.
- Garaged in the Perth suburb of Morley, post code 6062.
- Loan finance.
- RAC Standard Roadside Assistance membership at $72 p.a.
Variable costs
Variable costs are calculated in dollars per week and are based on costs that vary with the number of kilometres driven, such as fuel, tyres and maintenance.
Fuel costs
The fuel price used is the Perth metropolitan average from May 2008, based on Fuelwatch data published by the State Government. The prices used are:
- ULP 156.2 c/l
- PULP 162.9 c/l
- UPULP 167.7 c/l
- Diesel 184.3 c/l
- LPG 67.8 c/l
Fuel consumption data is taken from the Green Vehicle Guide, published by the Federal Department of Transport and Regional Services.
Tyre costs
Tyre costs are calculated using the following assumptions:
- Each set of tyres is estimated to last 45,000 km.
- The cost of another single tyre.
- Replacement costs, including fitting, balancing and wheel alignment.
Replacement cost is the recommended retail price of suitable tyres based on:
- Original branded tyre of equivalent specification.
- Alternative brand of tyre of equivalent specification.
Service and repairs
Includes estimates for regular servicing and unscheduled servicing and repairs.
Regular service - costs are calculated using manufacturers recommended service schedules and include a range of original equipment replacement parts.
Unscheduled servicing and repairs - includes a range of replacement parts for normal driving conditions and assumed annual distance. Labour hours have been estimated from the Victorian Automobile Chamber of Commerce Time's Guide.
- Labour rates used for 2008 as surveyed by RAC.
- Major car dealer rate of $115.65/hour (inc GST) for the first 3 years.
- Major repair franchise site rate of $95.74/hour (inc GST) for the remaining 2 years of ownership.