Highlights
For many people, their own car is the most important means of transport. According to the Federal Motor Transport Authority, there are now more than 42 million registered private cars in Germany. The majority of car drivers buy their vehicle, while a smaller proportion use car leasing. In both cases, users have to pay for maintenance, insurance and taxes themselves. However, many car owners do not seem to have an accurate overview of how much money their car costs them in total per month. According to several studies, many car owners massively underestimate these costs.
A study published in 2020 by researchers from the RWI Leibniz Institute for Economic Research and the Universities of Mannheim and Yale found that car owners underestimate the total costs by an average of 221 euros. Car owners therefore underestimated their costs by more than 50 per cent. Around 6000 German households with their own car were surveyed for the study and the results were compared with ADAC data. According to the study, the average monthly expenditure for fuel, workshop visits, taxes, insurance and wear and tear is 425 euros - however, the Germans had only estimated 204 euros.
A Swiss study comes to a similar conclusion. Car owners in Switzerland also underestimate the monthly costs of their vehicle on average. For a mid-range car, they assume around 300 francs (equivalent to 310 euros) for depreciation, maintenance, insurance and taxes (excluding fuel and parking costs). In reality, the monthly costs are 635 francs (the equivalent of 660 euros).
Many car buyers do not calculate the costs
Many drivers even seem to refrain from checking the
It is difficult to calculate running costs, as shown in a household survey of 884 car owners. Only a quarter of respondents stated that they had calculated the running costs before buying their car and that these had an influence on their purchase decision. 40 per cent of households did not calculate the expected running costs at all before deciding to buy a car.
Drivers underestimate the loss of value in particular
One reason why car owners underestimate the total cost of their vehicle by more than 50 per cent is probably that expenses for insurance, taxes or maintenance are not incurred monthly, but rather irregularly throughout the year. In addition, the depreciation of the vehicle is not sufficiently taken into account.
Households are particularly off the mark with their estimates of repair costs and monthly depreciation. According to the study of German households, these two cost items caused average costs of €55 and €141 per month instead of the €26 and €20 stated on average.
By comparison, a car subscription - where everything is included in the monthly price except for fuel or charging current - can be much more attractive for drivers in terms of price. Especially compared to leasing. Although the monthly instalments are higher with a car subscription than with a lease, as the car subscription is an all-inclusive rate, additional costs such as fully comprehensive insurance, taxes and maintenance are included. With a lease, these costs are all additional to the instalment.
The purchase price is eliminated, as is the administrative effort
The car subscription also has an advantage over buying a car: the high purchase price for the car is eliminated. With most subscription providers, there is usually no down payment. As the fixed monthly price includes all possible costs apart from refuelling or charging, subscribers have full cost control.
There is also the time factor: the administrative simplification of car subscriptions saves subscribers a lot of time. Unlike most leasing offers and car purchases, subscription providers take care of insurance, registration, repairs, maintenance and breakdown assistance.
A car subscription is particularly attractive for people who do not want to commit to a car in general or a specific model in the long term. Car subscriptions are limited in time and have contract terms of between one and 24 months. This makes them more flexible than buying or leasing a car. And increasingly popular: according to the CAR Institute in Duisburg, the number of car subscriptions in Germany rose by 50 per cent in 2022.
The high flexibility of car subscriptions is also making them increasingly interesting for companies. They have been trying to remain as flexible as possible when financing their vehicle fleets for some time now. According to Dataforce, around 60 per cent of commercially used cars in Germany are leased. The leasing system is now facing competition from car subscription models. The main advantages of subscriptions are the shorter terms and more flexible cancellation options, which offer companies even more leeway. Flexibility that they need, especially in economically turbulent times.
