New vehicle intenders are increasingly searching for transparency associated with keeping a car on the road over its life. With the average car being over 10 years old in Australia1 evaluating and comparing cars as part of your research journey just became a whole lot easier.

What is Cost-to-Run and how do we calculate it?

Cost-To-Run (CTR) incorporates up to five variable components that form part of keeping a car on the road, excluding the purchase price and depreciation. These components are detailed below:

• Servicing – defined as manufacturer scheduled servicing inclusions and intervals based on maximum 5 years/75,000km.
• Energy – defined as the fuel source, be it Petrol, Diesel, Electricity or Hydrogen. A vehicle’s combined fuel consumption or energy usage is multiplied by kilometres travelled to provide an estimated cost.
• On-road Costs – defined as the expenses relating to registration, applicable government duties, 3rd party insurances, levies, and any other associated fees).
• Insurance – defined as an indicative comprehensive insurance quote based on assumptive criteria such postcode, unmodified vehicle, driver profile, kilometres travelled, usage, excess amount, and storage location.
• Tyres – defined as replacement of up to 4 tyres based on kilometre assumptions.

Covering all new cars from 2022 onwards, RedBook’s CTR API service returns a combined single $ value associated with each of the above-mentioned components, for a set period of both time and kilometres. The default and maximum time and kilometre range available is 5 years & 75,000km.

Euro NCAP now appears to have taken the position that the current trend of packaging many – if not all – a car’s features within a single infotainment screen is dangerous as it distracts the driver from the road ahead, especially when there’s a need to cycle through several sub-menus.

As part of plans that will be introduced from 2026, five out of 100 possible points achieved under the Safe Driving category will be awarded for vehicles that have “intuitive, easy-to-use vehicle controls”.

In what has been seen as a threat for those who don’t comply, Schram said that in future the score for intuitive controls could be increased further, with car-makers running the risk of missing out on a maximum five-star safety rating if they don’t comply.

There are numerous other benefits to having a “cost to run” value associated with a car for consumers. Several advantages of having a clear cost-to-run value are:

• Market Transparency: Having standardized and easily accessible cost-to-run information promotes market transparency. Removing the bias of brand, reputation, and perception for that matter, allowing for a truer comparison, one that can reveal items such as higher service costs, elevated insurance quotes to name but two.
• Informed Decision-Making: Consumers can make more informed decisions when comparing different vehicle options. Instead of solely focusing on the initial purchase price, they can evaluate the long-term costs, helping them choose a vehicle that aligns with their budget and financial goals.
• Savings Over Time: A cost-to-run value helps consumers identify vehicles that may have higher upfront costs but lower overall operating expenses, potentially leading to savings over the vehicle’s lifespan. This is particularly relevant when considering factors like fuel efficiency and maintenance costs.
• Environmental Considerations: Beyond financial aspects, a CTR analysis can include environmental considerations, such as the carbon footprint associated with fuel consumption. This information can be valuable for consumers who prioritize sustainability.

Cost-To-Run provides another rounded view of a vehicle’s affordability, helping consumers make well-informed decisions that consider both immediate and long-term financial implications. This transparency benefits consumers, the automotive industry, and efforts to promote sustainable and cost-effective transportation.

To learn more about RedBook’s Cost-to Run API please get in touch via info@redbook.com.au.