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Friday, March 6, 2009

What is the Cost of Driving?

Recently, I have been having car problems. I have spent over $2,500.00 on a new engine for a 2003 model. Not only that, the first engine installed proved to be defective, so the garage installed a second engine at no cost to me, but I still had a terrible, periodic noise under the hood. So, presently the car is back in the shop for further repair. All this, not to mention some minor body damage suffered during the repair. This car business is getting very frustrating. According to the Dept. of Labor's Bureau of Labor Statistics, car ownership costs are the second largest household expense in the U.S. In fact, the average household spends almost as much on their cars as they do on food and health care combined for their entire family. An average of 19.3% of household expenditures go for car ownership and operating expenses, money that could go for other important things such as college expenses, home ownership, or retirement savings. The American Automobile Association (AAA) reports that, on average in 2006, it costs 52.2 cents to drive one mile. This figure, of course, varies from model to model. But even the I.R.S. recognizes the driving you do in a business at 48.5 cents a mile. I find these costs to be calculated adding costs of fuel, depreciation, insurance and service, but still the true cost of car ownership seems outrageous. Speaking of depreciation on an automobile, Consumer Reports tells us that this is the largest cost factor by far. On average, it accounts for about 46 percent of total ownership costs over five years. The average model depreciates about 65% over these same five years. Owning a car seems to be a necessary evil in our mobile-minded country because we often have large distances between the places we commonly visit or work, and public transportation is not a convenient option to most of us. But owning a vehicle is costing us a lot of money. What is a car worth after these ownership costs are paid? According to the Automotive Lease Guide, in its report on the 10th Annual Residual Value Awards, which honors vehicles that are predicted to retain the highest percentage of their original price after a conventional three-year lease term, Honda ranks #1. Of course, this predicts only highest resale value. The list of winners can be found on www.alg.com. Here are some general results in the Industry Brand Rankings: Industry Brand Residual Value Rankings Rank Brand 1 HONDA 2 SUBARU 3 VOLKSWAGEN 4 TOYOTA 5 NISSAN 6 MAZDA 7 SUZUKI 8 SATURN 9 PONTIAC Only brands above the industry average were ranked. Below industry average were the following brands (listed in alphabetical order): Buick, Chevrolet, Chrysler, Dodge, Ford, GMC, Hyundai, Jeep, Kia, Mercury and Mitsubishi. What can a driver do while he is paying the high costs of automobile ownership? Well, here are some suggestions for saving money on automobiles.
  • Plan your trips.
  • Carpool.
  • Use public transportation.
  • Telecommute.
  • Compensatory Time.
  • Maintain Your Car.
  • Buy a Moderate Car.
  • Simply Drive Less.
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