What Car? Says 'Beware The Big Discounts'

As new car discounts are getting bigger and more widely available, What Car? is urging buyers to look beyond the discounts dealers will be tempting them with and check on motoring’s biggest cost - depreciation.

What Car?’s research reveals that some four-figure discounts do little to lessen the expensive hit of new car depreciation. In some cases, paying a little more for a new car can save you hundreds of pounds over a three-year period.

In addition to the huge cost of depreciation, What Car? has analysed petrol, servicing, insurance and road fund licence costs for 21 cars from seven categories, ranging from superminis to large 4x4s. In all but one instance, a car that costs more to buy up front - even after discounts - will save you hundreds of pounds when the total three year cost is taken into account.

Steve Fowler, Group Editor of What Car? said: "Few new car buyers realise that paying a little more now can actually save you hundreds of pounds later!

"A healthy discount on the list price is only part of the equation. We’d still encourage buyers to haggle before they buy, but they ignore the other costs they’ll incur over the time they’ll own the car - especially depreciation - at their peril."

For example, one of the summer’s coolest and most desirable cars in the supermini sector is the latest Mini. Although it’s priced above competitors such as the Fiat Punto and Honda Jazz and no discount is available on the Mini, it’ll cost less over a three-year period.

The True Cost of Ownership Fiat Punto 1.2 16V Dynamic 5dr Honda Jazz 1.4 I-DSI SE 5dr Mini One1.6 16V
List Price £9695 £10625 £10780
Target (discounted) Price £8480 £10205 £10780
Depreciation cost £4725 £4016 £3274
Petrol cost £2989 £2890 £3392
Servicing £681 £699 £599
Finance £812 £977 £1032
Insurance £927 £786 £894
Road fund licence £315 £315 £375
Total Cost over three years/ 36,000 miles £10449 £9683 £9566
Monthly cost £290 £269 £266

The True Cost of ownership over a three-year period and 36,000 miles is calculated as follows:

  • Estimated value of the car after three years is deducted from the What Car? Target Price to reveal the cost of depreciation.

The following is then added:

  • Official combined mpg figure x 36,000 x current average cost of fuel per gallon
  • Servicing bills over three years/36,000 miles as quoted in What Car? Buyer’s Guide
  • Finance based on borrowing the full Target Price amount over three years at an APR of 6.2%
  • Insurance costs are a typical quote for each car and an average driver, supplied by What Car? Insurance, over three years
  • Road Fund Licence for three years
15 July 2005 Staff

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