For people who drive more, the overall cost is greater but the cost per mile comes down to a little more than 51 cents per mile – which helps explain the perverse incentive to live miles and miles away from one’s job.
This year’s annual report emphasizes the hidden cost of depreciation. That’s essentially the process that begins the moment you drive a car off the car dealer’s lot. Through time and ordinary wear and tear, the value of the car erodes until that new vehicle becomes a used vehicle worth a fraction of its original sticker price.
Depreciation can account for about 40 percent of the cost of owning a new vehicle, or about $3,000 a year, AAA says. In the report, the organization shows how that cost looks over the life of its use.
What’s more, depreciation is also affected by the car market. These days, the falloff in value has become steeper for sedans, as consumer preference has shifted away from those vehicles in favor of SUVs and pickups, which lose less value, AAA says.
Green vehicles, however, depreciate less, as more and more people opt for hybrid and electric vehicles, and lower maintenance costs also help them retain value. Besides thinking of cars that hold their value because of customers’ preferences, anyone who’s buying a car should also think about how long they want to own it.
If you’re only wanting to hang on to the model for a short period of time, leasing might be better. Otherwise, owning for a longer period of time, while maintaining the car and taking good care of it, preserves its value better.
“[T]he big takeaway from this year’s numbers is that the popularity of pickup trucks and SUVs continues to grow, which comes at the expense of traditional sedan sales,” Michael Calkins, who is AAA’s manager of technical services, said in a statement. “This shift in buyer preferences is reflected in depreciation costs that are up for sedans and down for pickups and most SUVs.”
To dig into the numbers for you, here are several scenarios using the report with some imaginary vehicle owners and imaginary scenarios:
Leslie Knope owns a Ford Focus, lives in Rockville and works for Arlington County. She commutes about 40 miles each work day, or more than 10,000 miles a year, but is otherwise a homebody who likes to stay home on weekends and garden.
(The AAA report calculates a range of vehicles and mileage for owners who go 10,000, 15,000 or 20,000 miles a year. The Federal Highway Administration says the average driver goes about 13,500 miles a year.)
Considering only the cost of fuel and maintenance, repairs and tires, Leslie is spending more than 15 cents per mile. Factor in everything above, including depreciation, and her small sedan costs $5,775 a year or about 58 cents a mile.
When he’s not riding the commuter train or working late at the office, Don Draper drives a Jeep Grand Cherokee from his suburban home in Croton-on-Hudson, N.Y., to Manhattan, which is about 40 miles each way and helps put well over 20,000 miles a year in mileage on his vehicle. Considering only the cost of fuel, maintenance, repairs and tires, Don is spending more than 21 cents a mile. When you count everything, his medium SUV with four-wheel drive costs about $11,219 a year. But because those costs are spread over a lot more mileage than many other drivers, including Knope, his total cost per mile is a little more than 56 cents. His cost per day is nearly $31 – or about what it costs to put the thing in a parking garage for a couple hours.
Jane Jetson owns a Dodge Grand Caravan minivan, lives in Mitchellville and commutes to work in Southwest D.C. It’s only about 15 miles each way, but with commuting, errands and her daughter’s soccer practice, she puts about 15,000 miles a year on the vehicle. Just with fuel and maintenance — including repairs and those tires — she spends a bit more than 20 cents a mile. Counting everything, the tally for owning her minivan comes to $9,677 a year, or about 65 cents per mile. If she can persuade her husband, George, to move farther out and her mileage goes over 20,000 a year, the total cost will be $11,022 a year or about 55 cents per mile.
Renata Klein lives in Monterey, Calif., and drives a BMW i3 electric vehicle to work and her daughter’s school, racking up about 20,000 miles a year. Fuel, maintenance, etc. add up to a mere 11 cents a mile or so. With everything calculated into her cost as done in AAA’s report, she’s $9,307 a year to own her vehicle, or about 47 cents a mile.
Jed Clampett lives in Beverly Hills, Calif., and drives a Ford F-150. He’s never been a commuter and only seldom visits kin in the Ozarks, so the truck travels no more than 10,000 miles a year. Operating costs such as fuel, maintenance, and tires mean he’s spending a little more than 23 cents per mile. Put it all together with all the other stuff mentioned above, and his annual ownership cost comes to $8,563, or about 86 cents a mile. Which is nothing if you’re a millionaire.