Driving is Expensive!

May 30, 2012 by

Continuing in the Bike-to-Work Week spirit, following yesterday’s “Save Money Cycling,” this post highlights some startling statistics about the cost of owning and driving a vehicle.

As a cycling and carsharing enthusiast, I eagerly await each year’s release of AAA’s “Your Driving Costs” because I know its contents will be a treasure trove of marketing ammo I can use to promote my causes. 🙂

AAA “Your Driving Costs” Assumptions

Any study like this requires assumptions on which to base calculations. Your situation won’t match the assumptions, but you can do some guesstimating to tweak AAA’s results to more closely resemble your circumstances.

In the 2012 “Your Driving Costs,” AAA’s more important assumptions were:

  • Gas cost = $3.36/gallon
  • Miles driven are 60% city, 40% highway
  • Driver is a 47-year old married male with a good driving record
  • Vehicle financing is a 5-year loan @6%, 10% down

AAA runs the numbers for small, medium and large sedans, and for SUVs and minivans. You can look at the publication through the link above to learn the specific models included in each category.

Total Ownership and Operating Costs

AAA divides costs between Operating—gasoline, maintenance, and tires—and Fixed—insurance, license/registration, depreciation, and financing (interest). And it examines three annual mileage scenarios: 10,000, 15,000, and 20,000 miles per year.

Table of 2012 AAA Driving Costs for Average Sedan

AAA 2012 Driving Costs for Average Sedan

Here are AAA’s results for the average sedan, which it defines as a composite of its results for small, medium, and large sedans.

I’ve highlighted in yellow the numbers I find particularly stunning. First, just to park the average sedan in your driveway and admire it—never mind starting the engine—you’ll pay over $16 each and every day.

Then let’s say you’re feeling well enough fixed for cash to actually drive the car. If you typically drive 15,000 miles per year, you’ll pay about 20 cents per mile—on top of the $16.44 per day fixed cost—for an average sedan.

This makes the grand total cost for owning and driving an average sedan 15,000 miles per year about $9,000, or 60 cents per mile.

If you gross $50,000 per year and take home after taxes $40,000, then you’re working nearly 3 months per year just to pay for your average sedan, a rapidly depreciating asset.

Is this beginning to sound like lunacy to you? I think the natural human tendency—once you own a car—is to disregard fixed ownership costs and think of each individual trip as cheap, if not nearly free. We think nothing of driving 10 or 20 miles round trip to have a meal out or visit a Big Box store. In reality, according to AAA’s figures for an average sedan, a 20 mile round trip costs $12 for transportation. Add that to your prospective restaurant tab and you may be inspired to learn to cook well!

Summary of Totals from “Your Driving Costs”

Here’s a tabulation of total operating + fixed vehicle costs, on a per mile basis, for each of the vehicle categories AAA analyzed.

Table of AAA 2012 Total Driving Costs - All Vehicles

AAA 2012 Total Driving Costs -- Cents per Mile

Again, big numbers.

Saving on Car Ownership and Driving

Given the way American cities have developed and a general dearth of quality transit and bikeways, many people have no choice but to own a car. But, depending on where you live, you may have options, and if you choose to own a car, you can aim to minimize costs:

  • Carsharing: Combine biking, walking, transit, taxis, conventional rental car, and car sharing to meet your mobility needs and save a ton of money compared to owning a car. The emerging “peer-to-peer” model will mean carsharing is viable anywhere, not just in densely populated cities.
  • Cycling: Using a bike to meet most of your daily mobility needs has many benefits beyond cost savings.
  • Don’t finance: If you possibly can, save enough to buy a solid used car so you don’t have to add interest expense to your car ownership costs.
  • Drive smart: There’s little you can do about your age and gender—two big factors in setting your insurance rate—but you can control whether you drive safely and defensively.
  • Efficiency: Buy the most fuel-efficient car you can.
  • Maintenance: Investing in oil changes and regular maintenance will stretch your car’s life, reducing annual depreciation costs.

How Do You Think About Car Usage?

Is a car like a utility for you—expensive, yes, but necessary? When you’re contemplating a relatively short trip across town in your own car, does the transportation cost cross your mind? For most trips, do you think AAA’s average sedan or transit would be more costly?

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