If you own a car, the annual cost to drive it is down this year by several hundred dollars. That’s according to the AAA’s 2016 Your Driving Costs study. In fact, annual car ownership costs (the costs to own and operate a vehicle) have achieved a six-year low of $8,558 for a sedan.
Diving into the specifics, that means American drivers can expect to pay about 57 cents per mile, tallying about $713/month, covering their car’s fixed and variable costs.
While fuel costs have decreased, other costs have gone up, although moderately. Here’s a breakdown:
- Fuel – Down 25%. It’s now about 8.45 cents/mile ($1,267.50/year).
- Insurance – Up 10% to $1,222/year. The AAA says rising insurance costs are “likely attributable” to lower fuel costs, which leads to more miles driven, an increased number of collisions and higher payouts by insurance.
- Maintenance – Up 3% to 5.28 cents/mile ($792/year). According to the AAA, many newer vehicles require more expensive synthetic oils (semi- or full-synthetic). Increases in shop labor rates and extended warranty costs also factor into the maintenance increase.
- Depreciation – Up 3% to $3,759/year. Everyone knows that depreciation is the biggest car ownership expense. The numbers of new cars sold in 2016 resulted in larger numbers of used and off-lease vehicles coming into the market. This, in turn, led to reductions in retained value and resale prices, both of which contribute to increased depreciation.
- License/Registration/Taxes – Up 3% to $687/year.
- Finance charges – Up 2% to $683/year.
- Tires – Up 2% to 1 cent/mile ($150/year).
Car Ownership Costs by Vehicle Class
Broken down by vehicle class, annual car ownership costs range from a low of $56,579 for a small sedan to a high of $10,255 for a four-wheel drive SUV. Minivans, however, at $9,262, are less than the annual costs to own and operate a large sedan, at $10,492. Averaging the costs of all sedans, the annual ownership cost is $8,558.
John Nielsen, AAA’s managing director of Automotive Engineering and Repair, offers an interesting perspective for the one in five Americans who plan to purchase or lease a new vehicle in the coming year. “Many consumers may mistakenly believe minivans are more expensive to drive than a large sedan.” Nielsen says that lower gas prices “offer drivers the flexibility of transporting additional passengers and cargo while remaining more affordable to own and operate than a large sedan.”
Back in 1950, when AAA first published Your Driving Costs, driving a car 10,000 miles a year cost 9 cents/mile. Gasoline was 27 cents per gallon.