LAS VEGAS, Nev. Sept. 13, 2018. Owning and operating a new vehicle in 2018 will cost a driver an average of more than $8,800 annually, or $737 each month, according to a new study from AAA. The largest expense associated with purchasing a new car is something many drivers fail to consider – depreciation.
“Buying a new car is a major decision for most consumers,” said Michael Blasky, spokesman for AAA Nevada. “New vehicles offer the latest designs and cutting-edge technologies. But, car owners that like to change vehicles frequently should be thinking about the resale value – not just the purchase price – when choosing their next ride.”
Depreciation accounts for almost 40 percent of the cost of owning a new vehicle – more than $3,000 per year – and is influenced by a number of factors, including shifting consumer preferences.
As American appetite shifts to SUVs and pickup trucks, demand for sedans has slipped. As a result, depreciation costs of these once-popular vehicles increased up to 13 percent as compared to last year. Conversely, electric and hybrid vehicles, which have seen a gain in popularity, have only seen a slight dip in depreciation, with many offering cost benefits such as lower repair and maintenance bills.
Buyers often only give priority to purchase price and monthly payment when choosing a new car, sometimes selecting a vehicle based on the best deal available. The length of car ownership, however, is of equal importance. Consumers who plan to keep a vehicle for only a few years should be cautious of deep discounts and incentives offered by automakers and dealers. These are often designed to sell less popular models and directly influence depreciation. Low down payments and extended finance terms can also have a similar effect. Stretching a car loan over five, six or even seven years may be an effective way to lower payments, but owners may quickly find themselves owing more than the vehicle is worth.
“The secret to minimizing depreciation costs?” continued Blasky. “Keep your car for a long time and keep it well-maintained or even consider buying a quality, pre-owned vehicle.”
While the latest technology and options make them attractive to car buyers, a new car may not be the most economical choice for some buyers. AAA offers the following tips for consumers looking for alternatives to new car ownership or to make smarter decisions about their operating costs:
- Buy (gently) used – By driving a pre-owned vehicle in good condition, ownership costs are significantly lower. A safe, reliable vehicle can be found at an attractive price point.
- Fuel responsibly – Avoid wasting money on premium grade gasoline unless your vehicle specifically requires it and, if you’re one of the 20 percent of Americans considering an electric car, these vehicles offer lower fuel and maintenance costs.
- Show your car some love – It sounds counterintuitive, but spending money on routine maintenance can actually save you money in the end. To keep engines running cleaner and longer, consider switching to synthetic oil and upgrading to a higher quality fuel TOP TIER™ gasoline.
- Slow down – When gas prices are high, small changes in the way you drive can make a big difference.
AAA’s Your Driving Costs examined 45 top-selling 2018 model-year vehicles across the following nine categories. Figures are calculated based on the cost of fuel, maintenance, repairs, insurance, license/registration/taxes, depreciation and loan interest and are based on 15,000 miles of driving.
|Vehicle Type||Annual Cost*||Vehicle Type||Annual Cost*|
|Small SUV||$7,869||Large Sedan||$9,804|
|Electric Vehicle||$8,384||Pickup Truck||$10,215|
AAA’s Your Driving Costs study employs a proprietary methodology to analyze the costs of owning and operating a new vehicle in the United States, using data from a variety of sources, including Vincentric LLC. Additional information and detailed driving costs, including those for fuel, maintenance, repairs, insurance, license/registration/taxes, depreciation and finance charges can be found at AAA.com/YourDrivingCosts.
About AAA Nevada
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