How to drive down the cost of your motoring

Running a car is expensive. But there are many ways to make significant savings, says Rob Griffin

otorists are under attack. If it wasn't difficult enough finding hundreds of pounds every year to cover the costs of petrol, insurance and congestion charges, drivers now face the prospect of paying every time they use the roads.

otorists are under attack. If it wasn't difficult enough finding hundreds of pounds every year to cover the costs of petrol, insurance and congestion charges, drivers now face the prospect of paying every time they use the roads.

Alistair Darling, the Transport Secretary, has just unveiled controversial plans to tackle the problem of daily gridlocks across the country by demanding up to £1.30-a-mile from people using the busiest routes - in exchange for lowering duty on fuel.

But even though Darling said on Thursday that it would be five years before a trial scheme is even road-tested, it's still an opportune time to examine ways that we can all cut the cost of motoring.

BUY A GREENER CAR

The sporty convertible with the fat exhaust may be a head turner, but it could end up costing you an absolute fortune. Opting for smaller, more economical cars is the best option for those wanting to save money. The key is choosing the most "green" car in your price range. A comparison by the AA of cars costing up to £10,000 found the most economical model recorded 68.9mpg while the worst came in with just 32.8mpg.

Over the course of a year the difference in running costs between the two could be almost £600, assuming fuel prices of 86p for petrol and 90.1p for diesel, with an average of 10,000 miles covered. A similar experiment with cars priced between £20,000 and £30,000 came up with a potential saving of £1,772.10.

Also, avoid buying straight from the showroom as the value of some cars can depreciate by as much as 40 per cent in the first year. If you've just splashed out £25,000 it can be choking to realise it will be worth just £15,000 within 12 months.

It's also worth having a look at the new breed of electric cars - and the hybrid versions that use a combination of electricity and petrol, a great example of which is the new Toyota Prius (see story below opposite).

CUT INSURANCE BILLS

Shop around for the best premiums and scour specialist websites such as www.insuresupermarket.com for bargains. You can often negotiate discounts if your car is fitted with an immobiliser, is kept on the driveway overnight and you agree to limit your annual mileage. Discounts of up to 10 per cent are sometimes available for those fitting satellite tracking devices - but as these can cost £300 to install and in the region of £120-a-year to maintain - the overall savings may be limited.

Taking an advanced driving course can also help. Insurers sometimes offer reductions of as much as 40 per cent, although discounts will vary.

Remember that any additional extras you put on your car - such as flash wheels and spoilers can increase the premium you will pay. Finally, only agree to courtesy car provision or legal expense cover if you really need it as it will cost you extra, while agreeing to pay a higher excess can lower the initial price.

CONSERVE YOUR FUEL

It may sound bizarre but taking off roof racks, getting rid of weighty items such as golf clubs out of the boot and keeping the windows up can reduce drag and avoid too much fuel being guzzled, according to ETA Services.

You should also check your tyre pressures as every 6psi under-inflated means a 1 per cent increase in consumption, as well as turning off the air conditioning system. Careful driving is also important. Harsh acceleration and sharp braking, for example can mean a 30 per cent hike in petrol use.

It's also worth investigating a switch to the more environmentally-friendly liquid petroleum gas (LPG) as this can result in savings of 40 per cent compared to normal unleaded petrol at the pumps.

Until recently it was even possible to get grants to cover the cost of switching. However, the Government's PowerShift Grant is not currently available, following a dispute between the European Commission and the Department for Transport. Civil servants are still trying to resolve the disagreement, but if you are considering converting your car to LPG in the future, it's worth getting in touch with the Department for Transport to see what, if anything, is available.

LOWER RUNNING COSTS

Under EU rules you don't have to get your new car serviced by a franchised dealer - but it may be worth your while. Having dealers' stamps on your service records may add to a car's value when you come to sell it. If it's an older car it might be worth opting for a smaller, local garage rather than one of the main dealerships.

PLAN YOUR JOURNEYS

If using your car is unavoidable then it's worth giving some thought before starting out. Use route maps - either available for your computer or via websites such as the AA - to work out the cheapest, quickest or most cost effective routes. Avoiding peak times will mean you're less likely to be stuck in frustrating traffic jams watching your fuel tank gradually empty.

CAR SHARING

Tuesday is National Liftshare day which has the aim of highlighting the environmental benefits of car-sharing. Did you know, for example, that the average car commuter drives 19 miles every day? Cutting that by half would save 648kg of carbon dioxide in one year - the same as that absorbed by 216 trees.

How do you find a lift? The most obvious place to start is to chat with friends and work colleagues to see if your daily schedules and journeys match. Many people from the same area will be attending the same clubs and night classes. Failing that you can log onto www.liftshare.com, a free online service that enables you to register your details and then scours the database for members closely matching your requirements.

It can be worth your while. For example, a driver owning an Audi A3 in a major city such as Birmingham would pay around £5,205.38 to travel 12,000 miles-a-year. However, this figure falls to just £2,602.69 if they alternate with a work colleague.

SAVE FOR A RAINY DAY

Instead of paying each bill as it comes along, why not set up a savings account offering a decent interest rate in which you can make regular payments? Not only will you have enough to cover unexpected bills but you'll also be earning interest. Make sure you can get access to cash instantly and that there aren't any restrictions on the number of withdrawals you can make in any one year.

JOIN A CAR CLUB

Do you really need your own car? If your vehicle spends the vast majority of the week parked on the drive then you should consider selling it and just hiring one when you need to go out.

There are now a number of car clubs operating a fleet of cars that can be rented cheaply. One such provider is Streetcar which offers a pay-as-you-go service for just £4.95-an-hour. The basic idea is that people can book a car - either over the phone or online - and collect it from one of the pre-arranged pick-up points.

Their membership card gives them access to the vehicle and the PIN number releases the immobiliser. After proving extremely successful in London, the scheme is about to go nationwide in Brighton, Bristol, Oxford and Cambridge.

TWO WHEELS BETTER

How do you fancy swapping your car for a scooter or motorbike? If you plump for one with modest power they will often be more affordable than a car, the insurance will probably be cheaper, they're economical and you can roar past stationary cars gridlocked on the roads. The downsides, however, include the risk of being knocked off and getting a thorough drenching every time it rains.

The annual cost of running a 1200cc car - including factors such as depreciation, petrol and insurance - is £3,970, according to a joint study by RAC Motoring Services and Emmerson Hill Associates. The comparative price for a 250cc bike was just £2,410-a-year - an annual saving of over £1,500.

Alternative one: pedal power

* Today is the first day of National Bike Week, and more than 300,000 people across the country are expected to take part in events to mark the annual celebration of cycling - but is getting on your bike a viable alternative to the car?

* First, bicycles are a lot cheaper than cars, require very little maintenance and attract next to nothing in the shape of running costs. This is in stark contrast to the expenses involved in running a car, even if your workplace is less than half an hour's drive away.

* To get up and pedalling, you'll need a decent bike. Lance Armstrong, inset, right (the six-times winner of the Tour de France) rides a Trek bike. This company makes a range of hybrid bikes, which are suitable for commuting and for leisure cycling, starting from £199.

* An annual service and a few spare parts might add £150 to your bill, plus you'll need a helmet, about £30, a good lock, £30, and a pair of lights, at £15-20. Even adding these figures together, you'll make a big saving compared with a car.

* However, cycling is not without its risks. Every year, more than 100 cyclists will be killed and a further 2,000 seriously injured on Britain's roads. Many councils operate adult cycling proficiency lessons and, if they don't, your local cycling club may well run its own courses.

* If you're planning to do a lot of cycling, it would be worth considering taking out third-party insurance but check what your home contents insurer offers.

* Employers are cottoning on to the advantages of having a fitter workforce. Many companies are actually installing showers and changing facilities, while the very forward-thinking even have secure parking for bikes on the premises.

* There are also attractive tax breaks on offer. When an employer provides or contributes to the cost of travel for employees there would be tax and National Insurance contributions to pay. However, there is no tax charge due if an employer offers its staff cycles and safety equipment.

Alternative two: planet-friendly Prius

* Hollywood stars including Brad Pitt and Cameron Diaz own a Toyota Prius. Now British cabinet ministers are being issued with the environmentally friendly car that can cut pollution and also beat the congestion charge.

* The Prius is a hybrid car which is driven by both a conventional petrol engine and a modern electric motor.

* At low speeds, the car will automatically switch to electric power, thus saving your petrol and reducing emissions - which helps protect the planet. In electric mode, your fuel costs are dramatically lower. While in petrol mode, the battery recharges itself, so that the car's range is not so limited as that of purely electric vehicles.

* The Prius is designed with a futuristic concave roof - in addition, the dashboard includes a hi-tech monitor that tells drivers when the battery needs recharging.

* Eight ministers have so far taken up the Government Car Service's offer of a Prius, replacing their Rovers or Jaguars with one of the £17,000, five-door hatchbacks - "Two Jags" John Prescott has yet to join them, however.

* Leonardo DiCaprio, Jennifer Lopez, Gwyneth Paltrow and Dustin Hoffman all own a Prius - and Charlize Theron and Orlando Bloom were driven to the Oscars in one.

* More than 1,000 Prius cars were sold in the UK over the year to the end of March, and the company expects total sales for 2005 to reach more than 3,000. Toyota now plans to launch a hybrid 4x4.

'My car club saves me thousands'

Investment banker Pierre Schreuder prefers to hire a car instead of buying his own - and insists it saves him thousands of pounds. The 27-year-old from London books a vehicle from the pay-as-you-go Streetcar service for less than £5 an hour whenever he needs transport.

And he believes it's a far better option than seeing his hard-earned cash disappearing on tax, insurance, congestion charges and a car that's depreciating in value.

"I have been using Streetcar for a couple of months and find it very convenient, because you can just use it for as little as 30 minutes," he says. "It's also a pain to own a car in central London, because it's difficult to find parking spaces, as well as its being expensive to run."

Schreuder backs Government plans to encourage local authorities to do more to help car clubs get off the ground.

Ministers have urged authorities to include provision for car clubs in their local transport plans - the Department for Transport already says car-sharing schemes should be a basic part of local councils' transport strategies.

"If more people joined car clubs, they'd save money and there would be less traffic on the road," says Schreuder. "One reason why streets are so congested, especially in cities, is that because people own cars, they make unnecessary journeys."