Average Cost Of Car Ownership Creeps Up To $8,946 Per Year

May 1, 2012


Looking for a new car? You're probably taking a long hard look at window stickers, vetting rides based on their suggested retail prices.

And that's all well and good, but don't forget the costs that follow: according to AAA, the average U.S. car owner now pays $8,946 a year on gas, tires, maintenance, registration fees, financing, and other expenses associated with owning a vehicle.

AAA's figure is based on a midsize sedan traveling an average of 15,000 miles per year. Simple division will tell you that that works out to be 59.6 cents per mile -- up 1.9% over last year. The stats are a little better if you drive a smaller, more fuel-efficient car and you travel fewer miles, but they can be significantly worse if you own a big car and drive farther during the year.

What's going up?

The biggest reason for 2012's increased cost of ownership is -- drumroll, please -- gasoline, which may not reach the price points analysts had feared, but it's still awfully high. Fuel alone has added 14.8% to the average cost of ownership. Tires are up 4.2%, insurance ticked up 3.4%, and maintenance is up slightly, by 0.7%.

What's going down?

The interesting thing is that depreciation has slowed. People are holding on to their vehicles for much longer these days, and as the turnover rate winds down, there are fewer used cars available -- and those up for grabs come at a premium. As a result, depreciation has slipped 4.9% in the past year. That car in your driveway is a little more valuable than you thought.

Our take

Most marketing professors will tell you that buying is an emotional event. It's not based on facts or needs, but on impulses and wants. 

Frankly, that's how branding works. A product's brand makes an emotional appeal -- "I'm cheap!", "I'm green!", "I'm luxurious!" -- and that's what makes us buy. Heck, why else would there be a bajillion brands of soap at the grocery store? It's all just soap, y'all. 

The same holds true with buying a car. We may spend more time researching a ride since it's such a big-ticket item, but ultimately, we tend to go with our gut.

And that's where we get into trouble. We end up with a car that doesn't suit our needs, and it costs an arm and a leg to keep on the road.

If you're looking for a new set of wheels, we can't dial down the emotional pull of this ride or that one, but we can encourage you to consider the projected annual cost of ownership. Kelley Blue Book posted some of the best vehicles on that front earlier this year. Have a look before signing on the dotted line.

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