Car running costs drop to 2005 levels

LONDON, Aug 3 (Reuters) The cost of running a car has dropped to around the same level as two years ago, spelling trouble for the government's drive to promote public transport, research shows.

The day-to-day expenses of running a car, such as fuel and maintenance, have fallen close to levels of 2005, according to the RAC's annual ''cost of motoring index''.

Car maintenance costs have dropped 8 per cent to 273 pounds per year in the past 12 months while the real cost of fuel consumption has declined 10 per cent.

Petrol prices are 0.24 per cent lower than a year ago and diesel is down 1.22 per cent, but growing fuel-efficiency has led to the larger drop in total annual cost.

Lower running costs have helped slow the rise in the overall cost of motoring: it rose 3 per cent in the past year, compared with an 11 percent jump the previous year.

The average family car now costs 5,627 per year to keep on the road -- an increase of 162.70 pounds year-on-year, according to the index.

It charts the costs associated with owning and running 17 models of car, including purchase price, depreciation, insurance, fuel, servicing, VAT and breakdown cover.

While the cost of maintenance and fuel has declined in the past year, depreciation and motor finance costs have risen.

Depreciation -- the largest cost factor -- rose 6 per cent to an annual 2,357 pounds.

Meanwhile, the cost of borrowing jumped 17 per cent to an average of 169 pounds on the back of five rises in the Bank of England base rate in the past year.

RAC technical director David Bizley said the figures were unlikely to help the government meet its environmental targets.

''It's good news that the day-to-day costs of motoring are in decline, which will help to relieve some of the burden of running a car,'' he said.

''However, with both bus and train fares continuing to rise, and with growing congestion making journey times unreliable on our roads, the fall in car running costs is unlikely to help government in its attempts to persuade motorists to make greater use of public transport.

''If motorists continue to be wedded to their cars, then financial incentives are going to be needed to encourage the uptake of greener vehicles.'' REUTERS SAM RS0849