April 23, 2015

Does it Really Cost $8876 a Year To Drive a Car?

AAA says that the average cost to own and operate a sedan is $8876 a year.    Thats the result of their "Your Driving Costs" study.    Does that seem high to you?  

I knew for a fact that this is much more than what the average American actually spends.   We can see in the BLS Consumer Expenditure Survey for 2013 that the average household spent $9004 for 1.9 cars.   Thats $4739 per car.

I wondered how AAA figured it and you have to read  quite a ways into the article to find that they say:  " Ownership costs are calculated based on the purchase of a new vehicle that is driven over five years and 75,000 miles"

Ah, so they're really figuring the cost of a NEW car.   Well thats not really the same as the average cost of driving.  Its the average cost of driving a new car.

And the methodology they use sounds a lot like how Edmunds figures the TCO for cars.  I figured I'd check how AAA and Edmunds compares.    I don't see an average TCO cited by Edmunds anywhere but I can pick a few car models to get an idea.

AAA total for 5 years would be $44,380

Here's a sample of cars and their TCOs from Edmunds.
Toyota Corolla = $31,835
Honda Accord = $36.976
Ford Fusion = $40,085
Buick Regal = $45,493
BMW 3 series = $51,714

This puts AAA's figure more in the average or even closer to entry level luxury car.    I'd say the AAA number may be accurate as a true average figure as more expensive cars will skew the numbers upwards.

I think AAA's figure is accurate but its just an average for new cars and includes all the high end and expensive cars.


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