Driving costs hit six-year low, finds AAA

Due to falling gas prices, 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, a driver can expect to spend 57 cents for each mile driven, 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 Paul, AAA Northeast senior manager of traffic safety.  “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.”

Here is a composite average cost for several size categories of vehicles:

Based on 15,000 miles, annual total cost, annual cost per mile:

  • Small Sedan, $6,579, $0.4386
  • Medium Sedan, $8,604, $0.5736
  • Large Sedan, $10,492, $0.6994
  • Sedan Average, $8,558, $0.5705
  • SUV (4WD), $10,255, $0.6837
  • Minivan, $9,262, $0.6175

The AAA analysis covers the following breakdown of costs:

Fuel: DOWN 24.62% to 8.45 cents per mile/$1,267.50 per year (-$414).

Compared to last year’s study, the average price of regular fuel fell more than 25% to $2.139 per gallon in the fourth quarter. At the same time, vehicle redesigns and improved powertrain technologies increased the average fuel economy of the sedans used in the study to 26.71 mpg.

Insurance: UP 9.60% to $1,222 per year (+$107).

Insurance rates vary widely with driver, driving habits, issuing company, geographical area among other things. While cost estimates are based on low-risk drivers with good driving records, even this group has seen rates rise over the past few years. Rising costs are likely attributable to lower gas prices, which have resulted in more miles driven, greater numbers of collisions and higher insurance payouts.

Depreciation: UP 2.87% to $3,759 per year (+$105).

The single largest ownership expense, depreciation, rose for 2016 due to robust new-car sales and, therefore, increasing numbers of used and off-lease vehicles entering the marketplace. This reduces retained value and resale prices, thus increasing depreciation.

Maintenance: UP 3.33% to 5.28 cents per mile/$792 per year (+$25 per year)

While there is significant variation among individual vehicles, modest increases in vehicle maintenance are attributable to engines requiring more expensive semi- or full- synthetic motor oils, and increases in extended warranty pricing and shop labor rates.   

License/Registration/Taxes: UP 3.31% to $687 per year (+$22).

License, registration and tax costs are impacted by vehicle sales prices and state/local tax rates. In addition to rising vehicle prices, many states, counties and cities have increased their fees related to vehicle purchasing, titling, registration and licensing.

Finance Charges:  UP 2.09% to $683 per year (+$14).

The average vehicle finance rate remained relatively unchanged in 2016. The modest dollar increase in finance charges is attributable to higher new car prices combined with increased tax, title, license and registration fees, which are typically rolled into the vehicle financing.

Tires: UP 2.04% to 1.00 cent per mile/$150 per year (+$3).

Due to the competitive and dynamic nature of the tire market, tire costs in 2016 are relatively unchanged, rising by just .02 cent per mile.

AAA has published Your Driving Costs since 1950. That year, driving a car 10,000 miles per year cost 9 cents per mile, and gasoline sold for 27 cents per gallon.

AAA Northeast is a not-for-profit auto club with 62 offices in Rhode Island, Massachusetts, Connecticut, New Jersey, New Hampshire and New York, providing more than 2 million local AAA members with travel, insurance, finance, and auto-related services.

Your-Driving-Costs-graphic

By participating in the comments section of this site you are agreeing to our Privacy Policy and User Agreement

© Hersam Acorn. All rights reserved. The Greenwich Post, 10 Corbin Drive, Floor 3, Darien, CT 06820

Designed by WPSHOWER

Powered by WordPress