Supply and demand
According to a study by the American Automobile Association, the cheapest cars to own and drive are the ones Americans least want: small sedans. That makes sense with most consumer goods in terms of supply and demand, but with cars and trucks, it’s a bit more nuanced, as the AAA study shows. The nonprofit looked at how much it costs to own and drive a car in the United States on an annual basis in 2017, and put the average damage to drivers’ budgets at $8469 a year, or about $706 a month. AAA took into account fuel, basic maintenance, insurance, depreciation, financing costs, and state fees and taxes and applied them to midrange models of the five top-selling vehicles in nine categories for the 2017 model year.
AAA broke out average annual ownership costs for sedans, SUVs, minivans, and—new for 2017 in the group’s 67-year-old Your Driving Costs study—small SUVs, pickup trucks, hybrids, and electric vehicles:
As the chart clearly shows, pickup trucks are the most costly vehicles to own and drive. Much of this is due to their penchant for guzzling gas, with AAA putting average fuel costs for a four-wheel-drive half-ton crew-cab pickup at 13.9 cents per mile compared to 7.2 cents for small sedans, for example. Across all vehicles, AAA put average annual costs for maintenance at $1186 per year, and for fuel at about $1500.
Depreciation is the major cost
The largest outlay for owners of all types of vehicles is neither fuel nor maintenance, but rather something new-vehicle owners have the least control over depreciation. AAA called depreciation the “biggest, and most often overlooked, the expense associated with purchasing a car.” New vehicles lose an average of $15,000 of value in the first five years, the study said. By most estimates, a new vehicle’s value drops by around 10 percent the minute you drive it off the dealer lot. According to AAA, small sedans and small SUVs have the lowest depreciation costs, at $2114 and $2840, respectively, while minivans and EVs have the highest, at $3839 and $5704. EVs are understandably volatile when it comes to depreciation, as technology continues to evolve and electric range correspondingly improves.
Most new-EV sales are also aided by a $7500 federal tax credit, and the depreciation of these vehicles falls more quickly from new to used as a result. AAA’s study adds the tax credit as a reduction to the license, registration, and taxes category. In any case, AAA noted that EVs could be considered “a surprisingly affordable choice in the long run” thanks to obviously lower fuel costs.
Article originally appeared on CarandDriver.com