Majority of Irish motorists underestimate yearly cost of running their car by €1,000

Participants were asked to give their best estimate of how much they personally spent each year on owning and running their car, including fuel or charging, insurance, tax, emergency and routine maintenance, parking, tolls and other costs.

The majority of motorists underestimate the annual cost of running their car, typically by about €1,000, according to the ESRI.

Its behavioural research unit found the median estimate of the cost of running a car was €2,000 a year, but the actual cost was almost €3,000 — 50% higher than what drivers believed.

It also found drivers of electric vehicles (EVs) reported the annual cost of running their car at €1,500 — close to half of the cost reported by petrol or diesel car owners.

The study, funded by the Department of Transport, surveyed a nationally representative sample of 801 motorists.

Participants were asked to give their best estimate of how much they personally spent each year on owning and running their car.

They were then guided through a detailed breakdown of expenses, including fuel or charging, insurance, tax, emergency and routine maintenance, parking, tolls and other costs.

The initial estimated cost was then compared to the itemised list of expenses, and found 72% of motorists underestimated their annual motoring costs.

Diesel car owners estimated the highest median cost — €2,500 compared to €3,546 of itemised costs — and EV drivers estimated the lowest, €800 compared to €1,560.

Petrol car owners estimated their costs at a median of €2,000, which compared to €2,715, while hybrid car drivers estimated €2,000 compared to €2,542.

The ESRI noted the degree of cost underestimation was similar across engine types, indicating "misperceptions are not limited to any particular group of motorists".

Insurance and tax were the most commonly reported cost, while fuel was the largest, with a median annual cost of €1,560.

Diesel car drivers estimated their annual cost of fuel as €1,800, petrol car drivers put theirs at €1,440, while hybrid and EV drivers put their fuel/charging costs at €1,300 and €480 respectively.

The tendency to underestimate the cost of running a car was widespread across age groups and income levels, though the study's authors noted respondents with children were less likely to underestimate, "possibly reflecting a greater necessity for budgeting awareness".

The study's authors said cost misperception "may contribute to the 'stickiness' of car ownership", as households that underestimate the financial cost of cars may be more likely to purchase a car than to consider alternatives.

It also noted people may be forced to drive due to a lack of public transport options in their area, and while the running costs of EVs appeared to be lower, they may be offset by their higher upfront costs.

“These findings show that most motorists are not aware of how much their car costs them each year,” said Dr Shane Timmons, senior research officer at the ESRI and co-author of the study.

“When people think about motoring costs, they focus on the most visible expenses, especially fuel, but overlook other costs that add up over time. Improving awareness of the full cost of car ownership could help people make more informed transport decisions.” 

The study asked participants not to include the cost of buying the car, and to only include amounts they had personally paid for and not to include contributions made by others, in order to estimate the cost to the individual and not the total cost of the car.