Christine Delise
Sr. Public Relations Specialist, MD
O: (410) 616-1900 (ext. 4361153)
C: (443) 244-7253
cdelise@aaamidatlantic.com

TOWSON, MD (September 19, 2018) – AAA’s 2018 Your Driving Costs study reveals the largest expense associated with purchasing a new car is something many drivers fail to consider – depreciation. In fact, it 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.

 

AAA urges car buyers to think about both market trends and length of ownership when shopping for their next vehicle purchase.

 

“New vehicles offer the latest designs, cutting-edge technologies and warranties that offer peace of mind,” said Ragina Cooper Averella, Public and Government Affairs Manager at AAA Mid-Atlantic. “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.”

 

AAA’s annual analysis found demand for sedans has slipped as American appetite shifts to SUVs and pickup trucks. As a result, depreciation costs of these once-popular vehicles increased up to 13 percent as compared to last year.

 

Electric and hybrid vehicles, however, have seen a gain in popularity with 20 percent of Americans saying they will likely go electric for their next vehicle purchase, up from 15 percent the previous year. This year, these vehicles also saw a dip in depreciation and offer many cost benefits such as lower repair and maintenance bills, making going green a more affordable choice than in years past.

 

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.

 

Leasing is similarly affected since payments are based in part on the projected residual value of the car at the end of the lease, serving as a good indicator of which models experience higher or lower depreciation. Since resale value is not a factor at the end of the lease period, buyers who prefer less popular models or only want a vehicle for a short time, may consider leasing a more viable option.

 

“The secret to minimizing depreciation costs?” continued Averella. “Keep your car for a long time and keep it well-maintained or even consider buying a quality, pre-owned vehicle.”

 

AAA’s Your Driving Costs found the average cost to own and operate a new vehicle in 2018 is $8,849 per year, a slight increase of 4.5 percent or $380, over last year. The figure is calculated based on the cost of fuel, maintenance, repairs, insurance, license/registration/taxes, depreciation and loan interest. The study examined 45 top-selling 2018 model-year vehicles across the following nine categories.

 

Vehicle Type

Annual Cost*

 

Vehicle Type

Annual Cost*

Small Sedan

$6,777

 

Minivan

$9,677

Hybrid

$7,485

 

Medium SUV

$9,697

Small SUV

$7,869

 

Large Sedan

$9,804

Electric Vehicle

$8,384

 

Pickup Truck

$10,215

Medium Sedan

$8,866

 

Average

$8,849

*Based on 15,000 miles driven annually

 

While the latest technology, style and options make them attractive to car buyers, a new car may not be the most economical choice for some buyers. Vehicle owners looking for alternatives to new car ownership or ways to minimize their operating costs should consider the following:

 

  • 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 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 NewsRoom.AAA.com or at AAA.com/YourDrivingCosts.

 

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Towson, MD 21286

AAA provides automotive, travel and insurance services to 58 million members nationwide and more than 975,000 members in Maryland.  AAA advocates for the safety and mobility of its members and has been committed to outstanding road service for more than 100 years.  The not-for-profit, fully tax-paying member organization works on behalf of motorists, who can now map a route, find local gas prices, discover discounts, book a hotel and track their roadside assistance service with the AAA Mobile app for iPhone, iPad and Android.  For more information, visit AAA.com.

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