If you are wondering how much cars actually cost to run and maintain, don’t just look at the price tag.
Recent trends have been making cars more affordable in Europe. Research says that Europeans pay on average €27,500 for a new car, although prices vary significantly per country due to varying factors. The average car retail prices across Europe can range from ~€22,500 in Italy, ~€25,000 in Spain, ~€26,000 in France, and ~€32,000 in Germany.
When buying a new car, the real cost of owning the car includes often-overlooked factors of depreciation, taxes, insurance, maintenance & average fuel costs. Within Europe, the average depreciation costs for small to medium cars represent 37% of the total cost of ownership. Road tax and VAT account for 20%, while fuel contributes 16% to the total cost of a car per month.
It’s important to be aware that depreciation shaves off at least 20% of a new car’s value the minute to buy it. And new cars continue to lose around 10–15% of their value for every year thereafter making depreciation cost the main contributor to the total cost of car ownership. But post-purchase expenses are also to be considered and built into a car ownership budget.
02 Taxes, registration fees, and licenses
There is a strong correlation between the high overall cost and high tax seen across the most expensive countries in the EU — Italy, Nordic countries, and the Netherlands. And the most inexpensive countries — Hungary, Czech Republic, Romania, are taxed the least. Norway is the most expensive country to drive a petrol car, while Hungary the cheapest. On average, Norwegians pay €708 per month, which is almost double the amount for Hungarians, who fork out €364, while the Netherlands is the most expensive country to operate a diesel car in Europe, at an average of €695 per month. This is a reflection of the strong regulatory push towards alternative fuels and sustainability goals via taxation. In fact, Norway is aiming for 100% of its new vehicle sales to be zero emissions by 2025.
03 Car insurance
When it comes to insurance costs, it’s one of those expenses that will generally be determined by where you live, your age, especially if 25 years old or less. The average price for car insurance in Europe is €80 per month.
04 Car finance charges
Finance charges are fees paid on a car loan or a car lease. Depending on the size of the down payment, the duration of the loan, and actual credit history, an extra €3600 a year on finance costs can be taken as the average.
05 Car maintenance
For the first few years, no repair costs can be expected as this is usually covered through a three-year/60,000 km factory warranty, which should cover any unexpected expenses. But it is recommended to replace tires every six years, irrespective of how many kilometers driven, which will cost around €100 to €200 to replace all four tires. The average maintenance costs for a car which is few years old is around €1,000.
The average monthly fuel cost in Europe is €100 for petrol and €70 for diesel. Italy is the most expensive place for petrol due to a high fuel tax. To estimate the cost of fuel each year, things like road conditions, the price of gas, and the mileage of the car model come into play. By dividing the average kilometers driven each month with the car’s fuel economy rating and multiplying that by the gas price per liter, a good estimate can be arrived at.
An EU-wide, multi-brand knowledge, and experience study by LeasePlan considered all the cost elements — price, depreciation, repairs and maintenance, insurance, taxes, fuel cost, etc. for vehicles in the small-to-medium segment, and estimated that the average cost of operating a car is €616 per month in Europe, which varies by as much as €344 per month between countries. The analysis was based on the first three years of operational costs and an annual mileage of 20,000 kilometers.