YOUNG DRIVERS INDEXFEBRUARY 2019

A bi-annual index for young people’s driving costs by

Key Statistics

• Annual cost of running a car for 17-24-year-old drivers drops £150, decreasing over 6% in the past six months

• Annual fuel costs dive by nearly 12% to £785 in the same period

• Car insurance makes up over half of young drivers’ first year running costs

• Average insurance for 17–24-year-olds has fallen by £67 (5%) over the past year, dropping to £1,281

Young drivers: the annual cost of running a car

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The cost of running a car for young

drivers has fallen by over 6% in the

past six months, primarily driven by a

decrease in the cost of fuel and motor

insurance. On average, a 17–24-year-old

driver will now pay £2,292 to run their

car in the first year, of which more than

half (£1,281) is the cost of insurance.

The fall over the last six months

counteracts a period of steady growth

in the costs for young drivers, with the

annual amount 17–24-year-olds pay to

get on the road at its lowest level in two

years. Two years ago, the cost of running

a car for this age group stood at £2,397.

The drop in the cost of fuel has been a

major driver in the reduction of overall

motoring costs for young drivers. In the

past six months, the annual cost of fuel

for an average young driver plummeted

by over £106 (11.9%) from £891 to £785.

The analysis of fuel costs, which is based

Cost of running a car (17–24-year-olds); last six months

Element Cost % of total cost

Insurance £1,281.00 55.89%

Fuel £785.25 34.26%

Est. VED (Road Tax) £126.00 5.50%

MOT £54.85 2.39%

Breakdown cover £44.97 1.96%

Total cost per year £2,292.07

on average annual mileage, average fuel

efficiency of cars in the UK and the cost

of premium unleaded petrol, shows that

prices have fluctuated significantly in

recent years, reaching a low of £739 in

the latter half of 2016 and a high of £891

in the first half of 2018.

Another important factor in declining

motoring costs over the past six months

has been the fall in insurance

premiums. Annual insurance costs

for young drivers have fallen by

3.3% from £1,324 to £1,281 on

average over the past six months,

while on a year-on-year basis,

premiums have fallen by nearly £70

or 5%, from £1,348. Insurance costs

account for over 55% of a young

driver’s running costs.

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After years of relentless rises in the cost of motoring, young drivers are finally seeing

some relief. While insurance still makes up over half of the cost of getting on the road,

the overall expense has reduced significantly over the past six months. However, with

the majority of the reductions resulting from fuel costs which are subject to significant

volatility, costs may not remain on their downward trajectory for long.

While we have seen some clear reductions, the cost of getting on the road for a

young driver is still disproportionately high and likely to be prohibitive to many.

The unaffordability of running a car can have a significant impact on young people’s

ability to get to and from work, and ultimately hold down a job. Our recent research

found that 27% of young people fear that they would risk losing their job if they could

no longer afford to drive.

The Government needs to tackle these issues head on, which is why

comparethemarket.com has called on the Government to scrap or cap Insurance

Premium Tax for young people to help ease the financial burden of car ownership.

Dan Hutson, Head of Motor Insurance at comparethemarket.com

Insurance Fuel Est. VED (Road Tax) Breakdown cover MoT

£44.97

£126

£54.85

£1,281.00

£785.25

Cost of running a car (17–24 year-olds) over the last six months

Insurance costs for young drivers have

begun to decrease after a long period

of rising premiums. Over the past six

months, the average premium for a

17–24-year-old dropped by 3.3% to

£1,281. Over the past year, premiums for

the age group have fallen by 5% which

equates to £67.

The fall in insurance costs over the last

year is likely down to lower competition

in the car cover market, as insurers are

now offering more competitive renewal

rates to try and retain customers.

However, even though premiums have

fallen slightly, there is still a significant

difference between the price motorists

pay by sticking with their insurer

versus shopping around, providing

an opportunity for savvy motorists to

save money. On average, the cheapest

premium on offer for 17–24-year-olds

stands at £1,018 – over £260 lower than

the average premium paid.

The fall in insurance costs follows a

period of significant hikes, primarily

driven by Government changes such as

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The cost of insurance to young drivers

Key Statistics

• Average insurance for 17–24-year-olds stands at £1,281 – accounting for over half (55%)

of a young driver’s first year running costs

• Premiums for this age group slightly fell by 3.3% over the past six months, reducing bills by £43

• Young drivers could reduce insurance costs by nearly £263 on average by shopping around

Insurance Premium Tax increases and

changes to the ‘Ogden’ personal injury

discount rate. Changes to the ‘Ogden’

personal injury discount rate – used

to calculate compensation for large

payouts to those with life-changing

injuries – announced in February 2017

led insurers to increase premiums to

cover the larger claims that the rate

would set.

Motor insurance premiums for 17–24-year-old drivers (Six months to January 2018)

Shop around price Average price Saving

£1,018 £1,281 £263

Alongside the discount rate change, the

Government announced a number of

increases to Insurance Premium Tax (IPT)

which doubled from 6% to 12% in a two-

year period from 2015. The higher taxes

on policies pushed up the premiums

for customers by an average of £165 for

young drivers. The tax disproportionately

affected young people as the average

increase for all ages stood at £66,

meaning that those could afford it least

were made to pay the most.

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When the Government implements blanket tax increases where costs

rise by a percentage of your premium, those who already pay high

insurance costs will be disproportionally affected. This can have far-ranging

consequences, impacting people’s ability to travel to work or visit their

families. An extra £165 a year is a huge extra cost for young drivers to bear.

Fortunately, the direction of travel for insurance premiums seems to be

more positive as costs have decreased slightly over the past six months.

However, young people still stand to save over £260 by switching their car

insurance, which could make a huge difference for many.

Dan Hutson, Head of Motor Insurance at comparethemarket.com

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What is the best car for your budget?

comparethemarket.com analyses the most cost-effective cars for young drivers.

• 17–24-year-olds could save an average of £416 on insurance by choosing more cost-effective

cars instead of some of the most popular models

• Vauxhall Corsa is the most popular car for drivers aged 17–24 years old

• The Ford Ka and the Fiat 500 are the only cars to make both the list of most popular cars

and the cheapest cars to insure

While many people won’t

want to think about the

insurance costs when going

through the excitement

of buying a car, it is an

important consideration.

You could save hundreds, if

not thousands of pounds,

over the lifetime of a car

by picking a model that is

cheaper to insure. There are

examples of cars which are

both affordable to buy and

manage. The Fiat 500, for

example, costs an average

of £4,944 for the car and an

average of £892 to insure.

Young people looking to get

on the road would be wise

to research the insurance

costs upfront before taking

the leap of buying a car

Dan Hutson, Head of Motor Insurance at comparethemarket.com

Young drivers could save over £416

by choosing a more cost-effective car.

Research from comparethemarket.com

found that the average premium of the

top ten cheapest cars to insure stood at

£864 for 17–24-year-olds, compared to

an average of £1,281 for the age group.

However, the savings in insurance

are offset by the cost of the car itself.

The average cost of the most popular

cars stands at £4,040 compared to an

average of £6,506 for the cheapest car

to insure.

The Vauxhall Corsa retains the top

spot as the most popular car for young

drivers, accounting for 12.24% of

enquiries and costing an average of

£3,050. The Ford Fiesta and the

Volkswagen Polo took second and

third spots for the most popular cars

accounting for 11.14% and 6.25% of

enquiries respectively.

The Fiat 500X has taken the top

spot as the cheapest car to insure,

costing an average of £814 per

year for a young driver, but with

an average value of £10,110. The

regular Fiat 500 is significantly more

expensive to insure, at an average

of £892, but with a considerably

lower average value of £4,944. The

Fiat 500 is one of the most popular

models amongst young drivers,

accounting for around 3% of all

enquiries from young drivers.

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Cheapest Cars to Insure for 17–24-year olds

Model Average premium Average car value

Fiat 500X £815 £10,110

Seat Arona £820 £18,812

Volkswagen Up! £836 £5,350

Mini First £848 £3,477

Skoda Citigo £876 £5,236

Ford Ka+ £876 £8,658

Toyota Iq £889 £2,593

Fiat 500 £893 £4,944

Suzuki Splash £895 £2,860

Citroen C1 £896 £3,024

Most Popular Cars for 17–24-year olds

Model Average premium Average car value

Vauxhall Corsa £1,274 £3,050

Ford Fiesta £1,221 £4,322

Volkswagen Polo £1,199 £4,839

Renault Clio £1,152 £2,478

Vauxhall Astra £1,520 £3,279

Volkswagen Golf £1,571 £5,835

Fiat 500 £893 £4,944

Ford Focus £1,389 £4,750

Seat Ibiza £1,226 £4,857

Ford Ka £964 £2,049

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Methodology

All data on insurance and breakdown

cover, as well as insight on car

models, has been sourced through

comparethemarket.com. All other data

has been sourced through Gov.uk.

A young driver is defined in this research

as drivers aged between 17 and 24 years

old.

When the average price is referred to,

this is the mean average of the top five

cheapest prices presented to a customer,

where a consumer has clicked through to

buy. Buying from the top five cheapest

prices presented, represents 90% of all

car insurance sales.

When the cheapest price is referred

to, this is the average cheapest price

presented, where a customer has clicked

through to buy.

All premium data refers to motor

insurance products featuring

comprehensive, third party fire and theft

or third party cover.