AAA: Expense of owning car steady - East Valley Tribune: Business

AAA: Expense of owning car steady

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Posted: Thursday, April 7, 2005 6:18 am | Updated: 7:29 am, Fri Oct 7, 2011.

Despite a 31 percent rise in gas prices, the cost of owning and operating a car is about the same as it was last year, according to a AAA study.

Gas prices have been offset by reductions in the annual average cost of depreciation, insurance, licensing and registration, as well as tires and maintenance, the automobile club said.

"When you have other costs going down at least that’s some kind of comfort," said Kim Pappas-Miller, a AAA Arizona spokeswoman.

AAA estimates it costs 56.1 cents per mile or $8,410 per year to own and operate a new passenger car, compared to 56.2 cents per mile or $8,431 annually in 2004.

But others were skeptical about AAA’s numbers.

"We haven’t researched it . . . but I can tell you interest rates and the other things are not down," said Bud Belz, president of Auto Club of America.

AAA compared the costs of three vehicles over five years and 75,000 miles of driving; a subcompact Chevy Cavalier LS, a midsize Ford Taurus SEL and a full-size Mercury Grand Marquis LS.

It calculated the average cost of gasoline in 2005 at 8.5 cents per mile, or $1,285 annually, compared to 6.5 cents per mile, or $975, in 2004.

"That’s a 31 percent ($310) increase in fuel costs, but a 5 percent decrease ($440) in other ownership costs more than makes up for it," AAA said in a statement.

Vehicle depreciation, insurance, routine maintenance, and finance charges are the biggest costs associated with driving an automobile, Pappas-Miller said.

The average car will depreciate about $3,789 in 2005, compared to $3,782 in 2004, AAA reported.

While insurance rates differ greatly from state to state and driver to driver, full coverage insurance is estimated at $1,288 for 2005 — a decrease of $315 from 2004.

In 2005, routine maintenance — including the manufacturer’s recommended maintenance operations and tire costs — will cost $885 or 5.9 cents per mile, compared with $915 or 6.1 cents per mile in 2004, AAA said.

The average finance charges for 2005 are $739 per year based on a five-year loan at 6 percent interest with a 10 percent down payment. In 2004, the average finance charge was $741 per year, AAA found.

Mesa resident Kelly Melville said higher gas prices haven’t hurt her.

"(The cost) is exactly the same," she said of driving. "It’s not any different than it was when gas was a dollar cheaper."

Cindy Bolyard, whose auto insurance rates just went up on her 1995 Mercury Cougar, said she’s seen the results of the gas price spike at her car repossession business.

Daniel Guido, vice president of the Valley’s chapter of the Automotive Service Association, says any savings on routine maintenance for new cars this year will be wiped out over time.

"The wash between the increase in gas and the lower maintenance during the first year or two is not going to pan out in years three and four," he said. "In fact, you’ll seen an increase because you know gas will go up. Commodities will go up too because when you get into years three and four, you’re going to buy rubber, tires, belts and hoses."

Jim Frederikson, executive director of Arizona Insurance Information Association, said AAA’s insurance cost estimates are too high.

According to the National Association of Insurance Commissioners, drivers are paying $880 per car annually for liability, collision and comprehensive coverage, he said.

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