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Saturday 17.03.2018 | Name days: Ģertrūde, Gerda, Gertrūde

People drive less to save up money

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Nearly half or 47% of car owners indicate over the past year they have started to travel by car less frequently or drive smaller distances, giving up several trips entirely.

Baltic news, News from Latvia, BNN-NEWS.COM, BNN-NEWS.RUSuch a change in habits is linked to people’s desire to cut costs of petrol, according to the survey by Swedbank Institute of Private Finances.

Overall, the survey results show that two-thirds of families in Latvia owning a car have changed their car use habits over the last year.

When describing these changes, residents also claim they are more carefully observing the principles of economical driving – 23% of car owners indicate this. One in five has started to choose alternative means of transportation, for instance, public transport or bicycle more frequently. Whereas, one in ten respondents has started to purchase illegal fuel.

According to the institute, compared with last summer, the 95-octane petrol and diesel fuel have surcharged by 12 santims per litre on average.

Moreover, the new excise tax rate on petrol came into effect as of June 1, 2011, increasing the price at refuelling stations by another two and a half santims per litre, with the price amounting to 92 santims on average.

Mārtiņš Stirāns, board chairman of the Latvian Fuel Traders’ Association, explains taxes in Latvia account for almost half (47-48%) of the petrol retail price, 46-47% is formed by oil product price, while the trade mark-up comprises 5-7%.

Transport expenses take one of the largest parts in a family’s budget, after food and housing costs. The survey found that families with cars spend an average of 100 lats per month on the vehicle, of which approximately three-fourths go to purchase fuel.

With rising fuel prices and without residents’ income level changing, people mostly cannot afford to increase spending. However, when allocating the same amount of money as a year ago, now the purchase will be 16 litres of fuel less, indicates Diāna Krampe, representative of Swedbank Institute of Private Finances.

Families, who buy fuel themselves (employer does not cover such costs), spend monthly 76 lats on average, while 358 lats a year, or around 30 lats a month is spent on car maintenance (repair, insurance, technical inspection, parking lots, etc.). So, vehicle expenses for such families hit 106 lats per month.

Relatively higher spending on car maintenance is recorded for people with high incomes, living in Riga or Riga region, as well as for rural area population and people travelling long distances by car on daily basis.

A car is not always a luxury commodity for families – regional residents usually drive long distances despite having relatively lower income. These people, in particular, were forced to revise their transportation habits, Krampe concludes.

According to the survey, overall 19% of households owning a car, carry out leasing payments – on average 129 lats a month. Consequently, the monthly car expenses for these families amount to as much as 235 lats.

Only 15% of the survey participants consider their family car usage habits will not change if the fuel price hits one lat per litre. Two out of every three people admit in this case they will evaluate the necessity of each trip more carefully, giving up some trips. Quite often, people single out that in an event of further petrol price gains they will opt for alternative means of transportation (bicycle, public transport). Just as many respondents point out they will start buying illegal fuel.

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