Drop in Fuel Prices Pushes 'Cost to Own a Vehicle' to Six-Year Low
April 07, 2016
ORLANDO, Fla. — Spurred by a nearly 25% drop in fuel price, the annual cost to own and operate a vehicle in the United States has fallen to a six-year low of $8,558, according to AAA’s 2016 Your Driving Costs study. This year, the study shows, a driver can expect to spend 57 cents per mile, approximately $713 per month, to cover the fixed and variable costs associated with owning and operating a car.
“Thanks to lower gas prices, American drivers can expect to save hundreds of dollars in fuel costs in 2016,” said John Nielsen, AAA’s managing director of Automotive Engineering and Repair. “Fortunately, this annual savings more than offsets the moderate increases in maintenance, insurance, finance charges and other costs associated with owning and operating a vehicle.”
While the price of fuel at the pump dropped a significant amount this year, every other cost associated with driving a vehicle that the study analyzed — insurance, depreciation, maintenance, license, registration, taxes, finance charges and tires — went up.
The cost of insurance saw the highest spike this year, growing 9.60% to $1,222 per year. The AAA study found that a likely reason for the increase in insurance cost lies with the decrease in fuel prices. As drivers are paying less at the pump, they’re willing to drive more, resulting in more miles driven and a greater number of collisions and higher insurance payouts.
The cost of depreciation, the highest ownership expense, rose by 2.87% to $3759 per year due to robust new-car sales and a resulting increase in amount of used and off-lease vehicles entering the marketplace, according to the study.
New-vehicle engines requiring more expensive semi- or full-synthetic motor oils along with an increase in extended warranty pricing and shop labor rates has resulted in a 3.33% increase to $792 per year, or 5.28 cents per mile, for the cost of maintenance for a vehicle.
According to the study, the cost of license, registration and taxes for a vehicle have gone up 3.31% to $687 per year.
Finance charges also saw a modest increase in price, according to the study. Finance charges increased 2.09% to $683 a year due to higher new-car prices and increased tax, title, license and registration fees.
The cost of tires has stayed relatively unchanged this year, according to the study. The cost of tires went up by 2.04% to $150 a year or 1 cent per mile.
Based on driving 15,000 miles, the study found that the annual cost for a small sedan would come out to $6,579, a medium sedan would cost a driver $8,604 and a large sedan would cost $10,492.
Contrary to what consumers might expect, the study also found that both four-wheel-drive SUVs and minivans would cost a driver less to drive in a year than a large sedan. The annual cost of driving a four-wheel-drive SUV or minivan, based on 15,000 miles, came out at $10,255 and $9262, respectively.
“One-in-five Americans plan to purchase or lease a new vehicle in the next year, and many consumers may mistakenly believe minivans are more expensive to drive than a large sedan,” Nielsen said. “With lower gas prices, these vehicles offer drivers the flexibility of transporting additional passengers and cargo while remaining more affordable to own and operate compared to a large sedan.”