Driving costs shift into high gear
June 13, 2012
As the summer driving season sets in, comes news that the already-high costs of driving a car in Norway have accelerated in recent years. Higher fuel prices, higher fees and, not least, more tolls have all made car ownership and driving pricier than ever before.
Newspaper Aftenposten headlined a recent summary of the costs of car ownership in Norway “Tallene du ikke liker å lese…” (The numbers you don’t like to read…). Norwegians have always faced much higher driving costs than motorists in many other countries because of long-held political views that cars are a luxury item that can be taxed heavily. Cars were rationed for more than a decade after World War II ended, and even in the early 1960s, would-be car buyers had to put their name on a waiting list and then accept whatever type of economy car became available for purchase. There wasn’t a lot of choice.
There still isn’t, by modern international standards. The car market has been booming in line with Norway’s booming economy, and selection has improved markedly just over the past 10-20 years. It can still be frustrating, though, to see a photo of a car model in a promotional brochure in, for example, a certain colour or with a feature like a sun roof or automatic transmission, only to be told by the dealership that “sorry, that’s not available in Norway.” Dealers blame the relatively small market in a country of 5 million people, where importers can control which models become widely available and what sorts of options they might have. While the situation has improved, not least because of rising Norwegian affluence and more demanding customers, one thing clearly hasn’t: The prices and related costs involved.
Aftenposten reported that Norwegians now pay an average price of NOK 371,000 (USD 62,000) for a new car. The price is largely a result of taxes that roughly double what the car might have cost in, for example, a far more competitive and much lower-tax market like the US. Higher-end cars, like Volvos, for example, can cost well over the equivalent of USD 100,000 in Norway.
Then come all the annual costs of driving the car. Depreciation was set at around 10 percent, as all car owners must declare the value of their cars on their annual income tax returns. It’s subject to Norway’s controversial formueskatt (fortune tax), which taxes individual net worth in addition to income. Depreciation costs on the sale of a car are generally much higher, estimated at around 30-50 percent of the new car price.
The annual average cost of insurance for driving the average car an average of 15,000 kilometers per year, was set at NOK 10,301 (USD 1,716), state registration fees (the same for all cars, despite their model or value) have risen to NOK 2,885 (USD 481), and maintenance/service costs were set at NOK 10,595 (USD 1,756).
With the pump price of unleaded gasoline now running around NOK 14.50 per liter (USD 9.70 per gallon), including Norway’s high fuel taxes, total average fuel costs were set at around NOK 17,000. The annual cost of the increasing number of tolls being imposed to help pay for new highways and discourage driving into downtown areas was set at NOK 2,100, although that’s low in cities like Oslo, where many commuters now go through two sets of toll plazas to drive into town, at a cost of around NOK 40 (USD 6.50) for each trip.
Parking costs have also soared in most Norwegian cities, but Aftenposten didn’t include that, perhaps since they vary widely. In Oslo, car owners can be charged as much as NOK 3,000 a month for a parking stall downtown, NOK 1,000 in more outlying areas. Hourly rates in lots have risen as well.
All told, the average annual cost of driving the average car in Norway now amounts to NOK 95,653 (NOK 89,259 for those driving diesel-fueled cars), or around NOK 300 every day.
Aftenposten also calculated that driving a private car just from Oslo to Hamar (a distance of 131 kilometers, or 78 miles, on the main highway) costs NOK 840 one way. “It’s worth noting that the actual costs in many cases (NOK 7 per kilometer) are double the rate that most motorists get reimbursed for, if they use their car for business purposes,” Aftenposten warned.
The bottom line is enough to make many motorists do what the politicians want them to: Take the bus or a train instead of driving. Given rush-hour traffic and more cars on the roads in Norway than ever before, though, it seems most Norwegians are just paying what it costs without stepping on the brakes. In many outlying areas, public transport also remains minimal at best.
Views and News from Norway/Nina Berglund
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