The Road Ahead in 2023: MotorEasy Outlook
As we round the corner into 2023 and grapple with ongoing rail strikes, the freedom and mobility of a car seem more important than ever.
But the backdrop is uncertain. A challenging economic landscape, coupled with long term climate change, challenge the types of cars we drive and the environments we use.
To make sense of the road ahead, we’ve compiled a list of some of the top issues facing motorists next year:
Fuel duty rates to impact prices
The recent softening in petrol and diesel prices will be dealt a blow in next year’s Spring Budget. The temporary 5p per-litre reduction in fuel duty introduced in March 2022 to ease fuel prices, will likely be removed. Expect to see a resurgence in petrol and diesel prices, which hit a peak of £1.91 per litre for unleaded and £1.99 in July 2022.
Electric Vehicle Road Tax on borrowed time
While EV drivers can continue to enjoy zero Vehicle Excise Duty (VED or road tax) for another two-years, all is set to change. In a bid to introduce a “fairer tax for all”, last November saw the Chancellor announce an end to the tax exemption from 2025.
The Rising Cost of Charging an EV
The cost to charge an electric vehicle is nearing parity with petrol and diesel cars, thanks to an 80% rise in the energy price, announced by Ofgem in October 2022. The price cap, which puts a limit on the maximum per unit cost of energy, increased to £3,549 for a typical household. Electric Car owners who are not on a fixed-price tariff agreement could see the cost of charging an average 59kWh battery increase from £16.52 to £30.68.
Extended Ultra Low Emission Zone ULEZ
In a move to improve London’s air quality and encourage motorists to switch to electric vehicles, the London Ultra Low Emission Zone will extend to all 33 London boroughs from 29th August. Non-exempt vehicles will face a £12.50 charge each time they pass through ULEZ.
Elsewhere, ULEZ or Clean Air Zones (CAZ), are on the march, with schemes including:
Bristol: a £9 CAZ was introduced in November 2022 for pre-Euro 4 petrol and pre-Euro 6 Diesels
Oxford: a phased £2 to £10 levy, depending on the vehicle type, entering a city centre Zero Emission Zone
Glasgow: June 2023 will see an extended range of vehicles included in its current low emission zone.
Aberdeen, Dundee and Edinburgh: Charging is set to be introduced in designated LEZs at various points in 2024, with pre-Euro VI diesel cars and pre-Euro IV petrol cars prohibited from entering the zones.
Tougher speeding rules
Thousands more drivers could expect to receive speeding fines, as the Police and Local authorities look to tighten-up the leeway that triggers a penalty notice. Drivers will now face prosecution if they exceed the limit by 10% plus 2mph, rather than the previous tolerance limit of 10% plus 3mph.
MOT every two years
Despite opposition from several driving organisations including MotorEasy, the government continues to debate the case for increasing MOT certificates from one year to two. According to a survey by the RAC, over half of drivers labelled the proposal a “bad idea”, citing concerns over road safety for motorists at large. Overall, 98% said it would lead to more unsafe vehicles on the roads, while a fifth said there would be more collisions.
New car waiting lists set to continue
Buying a new car? Be prepared to wait, a delivery time of 6-months or more is not uncommon for more popular vehicles. Supply chains for new cars have been hit by a triple whammy that started with Coronavirus and spread to a global shortage in semiconductor chips, followed by war in Ukraine. For the latest estimates on delivery times by brand, take a look at Carwow’s new car delivery times.
Used Car Prices a Mixed Picture
Given long waiting lists on new cars, it’s no surprise that cost of used cars have hit recent highs, as consumers switch to buying second hand at the very time when availability of stock is stymied. That said, the latest data suggests that it’s a mixed picture depending on the type of vehicle being sought, with the market driven by volatility, rather than a steady rise in price.
According to car buying web site heycar, November 2022 saw a 5.57% increase in the average price of a 5-year old car, following 3-previous consecutive months of growth. While average prices for 3-year old cars were down 3.46% in November. Perhaps more surprisingly, prices are lower than they were in 2021, with 3-year old cars down by 5.73% year on year and 5-year old cars down by 3.46%.
The Growing Role of GAP Insurance
Against the backdrop volatility of car prices, GAP insurance is proving an increasingly popular way to protect car owners against the depreciating value of their vehicle. In simple terms, GAP insurance will pay the difference between the initial value of the car, compared to the pay-out received from a main insurer at the time of write-off. As a main insurer’s payout could be 40% less than the original price paid for a vehicle, GAP insurance effectively provides the funds to buy a replacement car and pay-off outstanding finance.
Recent data from MotorEasy points to a 24% rise in the average value of GAP insurance pay-outs between 2021 and 2022. Illustrating the value in protection against the increased risk of a negative equity trap.
Falling demand for Electric Vehicles
Just as we’ve become accustomed to the relentless rise in sales of electric vehicles, the latest data from Auto Trader suggests demand for EVs is falling for the first time since the pandemic began.
According to the car buying site, demand has slowed 12.6 percent over the last 12 months, with fewer than one in 5 car buyers searching for an EV in November, compared to 27% in June.
The fact that petrol and diesel prices hit an all-time high in June is no coincidence. Further hammer blows were dealt by the removal of the government’s £1.5k subsidy for EVs in last November’s budget, and Ofgem’s 80% increase in the energy price cap last October.
With the average EV costing £10,000 more than its petrol or diesel equivalent, could the balance – at least temporarily – be swinging against the case for going electric.
Cost of repairs and maintenance
Earlier this year MotorEasy reported on the growing increase in the cost of vehicle repairs and maintenance, as workshops were hit by supply chain shortages for parts, rising energy costs and a shortage in qualified mechanics. In a study of over 12,000 warranty claims, average price for repairs increased from £279 between January-June 2021, to £372 between January-June 2022.
With costs likely to remain under pressure for some time, there has never been a better time to buy a service plan, locking in today’s prices before inflation takes hold.
Installing reliable and universal access to charging stations is perhaps the single biggest challenge the government faces as it seeks to drive electric vehicle adoption. Zap Map, the leading EV charging App provider, reported that there were 36,752 electric vehicle charging points across the UK in November 2022. While this represents a 29% increase since the end of 2021, the rate of growth was sporadic across the UK.
More to the point, as feedback from our members suggests the availability of charging points are woefully lacking, especially during peak travel periods. Bank holiday getaways and driving home for Christmas, can soon become an utter horror story as EV drivers jostle for the next available, working charger.
Helping you save money, hassle and time
While we’re living through challenging times, MotorEasy are always looking for ways to help motorists save on the cost of car ownership. If you haven’t done so already, log-in to your MotorEasy account to explore our growing range of MotorEasy and partner discounts.
We also offer a highly competitive service plan to help beat inflation, locking in the price of parts and labour over a two or three-year period. Cheaper than buying an annual service, our plans help you cover costs through easy monthly payments that can include your MOT.
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