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Comment: Keeping a sharp eye on business opportunities

Despite the Chancellor postponing the increase on fuel tax until October, many are still feeling the squeeze, with fuel prices having increased by almost 20% in 12 months.

The reality is that the cost of driving the average 1.6-litre, 40-litre tanked vehicle over 12,000 miles has increased by more than £300pa to a staggering £1,650 – and that’s not including service/repair costs, road tax, MoT, roadside assistance or insurance. Fuel alone is now amounting to almost 8% of the average annual UK salary of £22k*.

It’s widely reported that the average cost of running a car today has a much greater impact on people’s disposal incomes than their mortgages.

Combine this with the theory that the “true” rate of inflation is actually about 8% and this could be crippling the average household.

But, what does this mean for dealers?

A report recently suggested that 45% of people interviewed wouldn’t be renewing their car this year – perhaps they’re more reluctant to change their vehicles in post credit crunch caution, or maybe they’ll change to something more economical?

This is another hurdle that dealers will have to overcome – especially, if we are to believe a report published alongside the Budget, where Professor Julia King** argues that it’s only a matter of time before the lifetime cost of running a vehicle will have to be prominently displayed.

The report says a 4.4-litre petrol Range Rover, driven 12,000 miles per annum for 10 years, would cost £35,000, whereas, a diesel Peugeot 307 would only cost £11,000. Presenting information in this way, she says, will shock buyers into greener cars.

But, will it?... What’s certain is that dealers will need to remain very sharp at the point of sale if they are to maximize the opportunities available to them, not only to sell vehicles, but to sell the finance alongside it. Looks like the future’s “green”!

*National Statistics online, 2007
** Professor Julia King is the Vice-Chancellor of Aston University

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