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The High Cost of Owning a Car (Any Car, But Especially an SUV)

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cost of ownership
Cars seem expensive to me these days. Classics I once traded like baseball cards are now well out of my reach, and new cars keep getting laden down with gadgets and features. It’s reassuring to me that the Chevrolet Spark has a starting MSRP of $12,500. Adjusted for inflation, that would be $2,875 in 1975 dollars—a lot for an entry-level car. A Honda Accord’s $21,995 would be a king’s ransom of over $5,000 in ’75 bucks—eek.

The 2014 Honda Accord: cost to own, more than $9,000 a year. Forgot about taxes, depreciation, insurance and maintenance, didn't you? (Honda photo)And, of course, that’s just buying the car, not owning it. AAA has its 2013 Your Driving Costs report out, and it’s a shocker. Say you drive 15,000 a year in a typical sedan—that Accord, or maybe a Ford Fusion—sure, you’ve got car payments, but you’ve also got bills of $760 a month for all that hidden stuff (maintenance, gas, tires, insurance, licensing fees, taxes). Add it up, and we’re talking $9,150 (make that $11,600 if you drive an SUV).

Meet John Doe (Gary Cooper), with Edward Arnold (left), the great Walter Brennan (right) and Barbara Stanwick. At this point I have to pause to recall the hilarious “heelots” speech in Frank Capra’s populist film Meet John Doe (1941). The great Walter Brennan, playing a hobo, tells his fellow down-and-out Gary Cooper (in a boxcar) that all trouble comes from having money in your pocket. When you’re happy and broke, the heelots (“a lot of heels”) leave you alone, but get a bit of dough and they’re in pursuit of it. Here’s Brennan when he gets really worked up:

The first thing you know, you own things—a car, for instance. Now your whole life is messed up with a lot more stuff, like license fees and number plates and gas and oil and taxes and insurance and identification cards and letters and bills and flat tires and dents and traffic tickets and motorcycle cops and courtrooms and lawyers and fines and a million and one other things!
 
And what happens? You’re not the free and happy guy you used to be. You’ve got to have money to pay for all those things, so you go after what the other fellow’s got—and there you are, you’re a heelot yourself!

And so, my fellow heelots, let’s look at the numbers. The average cost per mile of owning a small sedan (based on 15,000 miles a year) is 46.4 cents, but that jumps to 75 cents if you buy a large car and 77 cents with an SUV like the Ford Explorer or Jeep Grand Cherokee. A minivan is a relative bargain, 65.3 cents.
 
Broken down, a small sedan (Ford Focus, Hyundai Elantra) costs $1,002 a year for insurance ($1,064 for a large car); $452 for license/registration/taxes ($780); and $2,402 for depreciation (a whopping $4,776). If it’s financed, add $606 ($1,106 for the big vehicle). The bottom line for a year’s use of a car is $7,962 (small car), $12,705 (large sedan), $13,141 (SUV) and $11,149 (minivan).
 The 2014 Ford Focus: Save money by going small. You could save $5,000 a year. (Ford photo)AAA points out you can save $2,000 a year by choosing a car one size down from your comfort zone. And since I often point out that people size their cars for once-a-year events like moving a Cub Scout pack or moving to a new apartment (rent a truck!), it’s a great rule of thumb to follow. Downsize even more drastically and the savings are huge. Just from the numbers above, the small car choice is going to save you $5,000 a year over the SUV. (And if you really want to be a budget shopper, wait for the $6,800, 84-mpg Elio...)
 
Note also that the big car depreciates far more than the small one. If you can bite the bullet and buy used, you’ll be ahead of the game. Someone else will have absorbed the depreciation costs.
 
Consumer Reports has looked at this, too, and comes up with similar numbers. A median car (Nissan Murano or thereabouts) costs more than $9,100 a year to own, but you can bring that down to $5,800 with a Mini Cooper. And the Honda Fit (which happens to be in my own garage) is only $5,300 annually (based on five years ownership). The pluses are a low price plus “low depreciation, great fuel economy, excellent reliability, and fairly low maintenance and repair costs.” Unfortunately, CU no longer recommends the car because of sub-standard offset crash tests.
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