The cost of cars is increasing 3x faster than average earnings

The cost of cars is increasing three times faster than average UK earnings, according to Uswitch

New research from Uswitch.com reveals the cost of the UK’s most popular cars are increasing up to three times faster than the average UK earnings.

Despite the cost of car insurance falling 48% since 2011, vehicle tax has increased 178% over the last decade and the UK’s most popular car has increased in price by 67%.

The price change of the UK’s most popular cars over the last decade

Car

Purchase cost in 2011

Purchase cost in 2021

Increase from 2011 to 2021

Volkswagen Golf

£13,615 £23,360 72%

Ford Fiesta

£9,995 £16,645 67%

Vauxhall Corsa (5-door)

£12,050 £16,815 40%

Ford Focus

£16,000 £22,215 39%

Vauxhall Astra

£14,310 £19,185 34%

Source: Uswitch.com

The country’s favourite car, the Ford Fiesta, cost less than £10,000 ten years ago, but will currently set you back £16,645 when bought new, an increase of 67%.

Of the five most common UK vehicles, the Volkswagen Golf has experienced the largest price increase, rising from £13,615 in 2011 to £23,360 today.

However, the average annual salary in the UK has only risen by 22% in the same period (from £21,100 in 2011 to £25,780 in 2021), a much slower rate than that of the UK’s most popular car.

The estimated cost of insurance, fuel and first-year tax in 2031

Purchase cost in 2011

Purchase cost in 2021

Increase/decrease from 2011 to 2021 (%)

Insurance

Insurance for the average motorist £843 £436 -48%
 

Fuel

Unleaded Fuel £1.33 per litre £1.14 -14%
Diesel fuel £1.39 per litre £1.19 -14%
 

Tax

First-year average Tax – Petrol Car £278 £600 116%
First-year average Tax – Diesel Car £278 £772 178%
First-year average Tax – Alternative Fuel Car £271 £591 118%

Source: Uswitch.com

The cost of car insurance premiums has decreased by 48% since 2011. This could be due to the changes since the pandemic started, with fewer drivers on the road and a decreasing number of new drivers able to take or book their tests.

Fuel prices have also decreased over the last decade, by an average of 14%, from £1.33 per litre of unleaded petrol in 2011 to £1.14 in 2021 and £1.39 per litre of diesel in 2011 to £1.19 in 2021.

On the other hand, first-year road tax has increased over the same period for petrol, diesel and alternative fuel cars by 116%, 178% and 118% respectively.

Joel Kempson, car insurance expert at Uswitch.com comments: “It’s good news for drivers that car insurance and fuel prices have decreased over the last decade.

“However, our research also reveals that despite the savings that could be had on fuel and insurance, tax and purchase prices have both risen considerably.

“With the purchase price of popular cars having risen at a faster rate than our average wages, it could mean that more people will struggle to afford a vehicle, especially first-time drivers.”