ORLANDO, Fla. (April 21, 2016) — Falling gas prices have lowered the annual cost to own and operate a vehicle in the U.S. to a six-year low of $8,558 for a sedan, according to AAA's 2016 Your Driving Costs study.
This year, a driver can expect to spend 57 cents for each mile driven — about $713 per month — to cover the fixed and variable costs associated with owning and operating a car, AAA said.
“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.”
Compared with last year's study, the average price of regular fuel fell more than 25 percent 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, AAA said.
However, due to lower gas prices, people are driving more — and getting into more collisions resulting in higher insurance payouts.
AAA estimated insurance costs for drivers generally increased 9.6 percent to $1,222 per year. Insurance rates vary widely with driver, driving habits, issuing company, geographical area and other factors. AAA's insurance cost estimates are based on low-risk drivers with good driving records, but even this group has seen rates rise over the past few years, AAA said.
Vehicle maintenance costs increased 3.3 percent to 5.3 cents per mile/$792 per year, attributable to engines requiring more expensive semi- or full-synthetic motor oils and increases in extended warranty pricing and shop labor rates.
A recent AAA survey found that 35 percent of vehicle owners have delayed service or repairs that were recommended by a mechanic or specified by the factory maintenance schedule. The auto club noted that ignoring recommended maintenance could ultimately result in higher repair costs.
Meanwhile tire costs remained relatively unchanged, about 1 cent per mile, due to the competitive and dynamic nature of the tire market, AAA said.
The single largest ownership expense, depreciation, rose nearly 3 percent to $3,759 per year for 2016 due to robust new-car sales and, therefore, increasing numbers of used and off-lease vehicles entering the marketplace, AAA said. This reduces retained value and resale prices, thus increasing depreciation.
In addition to calculating the driving costs for sedans, AAA determined annual costs associated with both minivans and sport-utility vehicles to $9,262 and $10,255 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,” Mr. 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.”
AAA has published Your Driving Costs since 1950 when driving a car 10,000 miles per year cost 9 cents per mile, and gasoline sold for 27 cents per gallon.