Calculating your yearly vehicle costs accurately is no small feat – after figuring your yearly fuel bill you still need to add up maintenance, insurance, taxes, finance charges, license and registration, and then calculate the depreciation on your vehicle. Or you could pick up a copy of AAA’s yearly “Your Driving Costs” study and default to their calculations of a similar vehicle. The averages may surprise you. The average cost of driving a new passenger car in 2004 is $8,431 a year, or 56.2 cents per mile, according to this study.
That cost has increased a substantial 4.5 cents per mile over the 2003 figure, the study reports. The average yearly increase had been about 1.13 cents over the last ten years. AAA attributes the sizeable jump to a revision in methodology for this year’s study to better reflect average use over five years and 75,000 miles.
The cost of owning a vehicle has gone down only once in 20 years, from 2001 to 2002, when in the aftermath of 9/11 manufacturers introduced zero percent financing on new vehicles.
The nation’s record fuel costs contributed to this year’s high figure, though the cost of fuel is only the third largest expense incurred by vehicle owners. The largest cost of ownership is depreciation at $3,782 yearly, followed by full insurance coverage at $1,603 per year. Fuel costs average $975 per year. Routine maintenance averages $915 yearly, according to the study.
These costs per mile – 56 cents to 79 cents – are from 34 to over 50 percent higher than the 37 cents per mile allowed for business use by the IRS. “We’ve talked with IRS about that over the years,” explains Geoff Sundstrom, a spokesperson for AAA. “Their position is that their allowable deduction for auto use is not intended to capture the full cost of owning and operating the car. They assume there is some personal use of the vehicle.” Fixed costs such as taxes, finance charges, license and registration don’t change whether you use the vehicle for business or not.
Some yearly costs for specific 2004 models:
Subcompact Chevy Cavalier LS - $5,680
- Mid-size Ford Taurus SEL Deluxe - $7,100
- Full-size Mercury Grand Marquis LS - $7,900
- Mid-size SUV Chevy TrailBlazer - $7,270 (not factored into national average)
- Full-size SUV Ford Expedition - $6,500 (not factored)
- Minivan Dodge Caravan - $6,400 (not factored)