MONEY COMMENT
Good And Bad News For Drivers

By Cliff D'Arcy
October 1, 2003

Despite being one of the world's worst drivers, I'm forced to comment on motoring issues once more!

Here's the bad news: in recent weeks, the media has published numerous stories warning motorists of a 1.28p increase to the tax on a litre of petrol (that's 5.8p a gallon in the old money). But, if you do your sums, this news isn't as bad as it looks. Using the Department of Transport's statistics:

• The average annual mileage of a four-wheeled car was 9,200 miles between 1999 and 2001
• The average fuel consumption was 32 miles per gallon
• Therefore, the average motorist uses roughly 288 gallons of fuel per year
• Hence, the increased fuel tax will cost a typical motorist another 288 x 0.058 = £16.70 a year.

Is this worth a public protest? As it happens, several leading fuel retailers have agreed to absorb the extra tax, so many motorists will see no increase in pump prices.

Anyway, it's always a good idea to shop around for your fuel when you're filling up. I suggest signing up with the brilliant AAPetrolBusters, which allows you to find the cheapest fuel in any area of the UK - and it's free! Saving 3p a litre every week means an annual saving of almost £40 for a typical motorist...

Anyway, now for the good news: the 'block exemption agreement' has been abolished (actually, it was abolished a year ago, but carmakers were given a year's grace to follow the new rules). "Huh, whassat?" I hear you say.

It's a cosy agreement that effectively prevents fair competition in the car distribution and servicing markets. Essentially, it binds car dealers to a single manufacturer and prevents them from selling rivals' vehicles and servicing each other's cars. In other words, it's a wheeze designed to avoid competition law and keep vehicle and servicing prices artificially high.

Thankfully, the block exemption agreement is now a thing of the past throughout Europe. The new rules break the links between manufacturers, dealers and servicing, which means that dealers can compete with each other across all makes of vehicle. What's more, consumers can now shop around for parts and servicing without being tied in to one dealer or manufacturer group. That means more business for independent garages, lower prices and a fairer deal all round.

So, don't feel too bad about the fuel tax rises. Remember that, thanks to improved market competition and discounting, your next car (and your next service) could well cost you a lot less than you think.

More: £104 A Week For A Car? Ouch! | Save Money On Your Next Car | Reduce Your Motoring Costs.