How you can ease the pain of car ownership

By John Adams

updated 3:54 p.m. ET July 15, 2008

The most important dollar figure for calculating what it costs to own and maintain a car is $140.

That’s about how much a barrel of oil currently costs.

This historic high is almost single-handedly responsible for driving up the cost of owning and maintaining your automobile. “The overall cost of ownership was likely down if you look at non-gas factors,” says Michael Calkins, manager of approved auto repair for AAA, based in Heathrow, Fl. “But the cost of fuel overwhelms everything else.”

A new car driven 15,000 miles annually will likely cost owners $8,121 per year, up from $7,823 in 2007, according to the 2008 edition of AAA’s annual study that assesses ownership costs. That’s a 1.9-cent increase per mile to a total of 54.1 cents per mile.

The study, called “Your Driving Costs,” calculated ownership costs for four-wheel-drive SUVs separately, and they drain significantly more funds than the average car: a projected $10,448 per year, up from $9,997 in 2007.

The size of a car has a big impact on how much it costs to finance, own and maintain. And generally speaking, the smaller the car is, the less it will cost owners.

For small sedans, the average ownership cost in 2008 is expected to be $6,320 — up from $6, 217 in 2007. Medium sedans should increase to $8,273 from $7,871, according to AAA.

For large sedans, the cost is much higher: $9,769 in 2008, up from $9,380 in 2007. For minivans, costs should increase to $8,644 from $8,639, which is lower than large sedans and SUVs.

Those numbers suggest that value-oriented drivers shopping for a large vehicle that accommodates five or more occupants would be better off choosing a minivan over a large sedan or SUV when it comes to ownership costs.

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Fuel expenses are up across the board, as expected. The most dramatic hikes are for less efficient larger vehicles.

Four-wheel-drive SUVs still have the highest fuel expense, costing owners a projected 17.05 cents per mile in 2008, up from 12.6 cents in 2007, according to AAA data. Minivans do slightly better on fuel: 14.01 cents per mile this year, versus 10.6 cents last year.

On average, owners of small sedans like the Volvo S40, for instance, will pay the least in fuel expenses: 9.39 cents per mile this year, up from 7.4 cents in 2007. Medium sedans will cost owners 12.34 cents per mile for fuel, up from 9.4 cents; and large sedans 13.38 cents, up from 10 cents.

AAA’s fuel costs for 2007 were based on $2.25 per gallon gas at the end of 2006, while 2008’s were based on $2.94 per gallon at the end of 2007 — a figure that already seems quaint.

“This gas-price-driven increase in expense doesn’t feel like a simple economic cycle to me,” says Charles Ballard, a professor of economics at Michigan State University in East Lansing, Mich. “Gas at $4 per gallon is a reality during the summer driving season this year, and if this maintains itself, people will get the message that we’re in a new regime.”

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Ballard and other industry analysts believe high gas prices could be here to stay. If so, the public will likely downsize to smaller vehicles, own fewer vehicles overall and drive fewer miles, experts say.

Higher fuel costs have already made an impact on Ballard’s next car purchase. “I’m going to get a passenger car,” he says. “I would have gotten an SUV, but I’m looking at a Chevy Impala. It’s not super fuel-efficient, but it has a feature that allows you to take down the back seat and haul stuff that way.”

The U.S. Department of Transportation reports that Americans drove 3.6 percent fewer miles last year than the year before — a total of 3.003 trillion miles in 2007 compared to 3.014 trillion miles in 2006, according to preliminary measurements.

That would make 2007 one of the few years — if not the only year — in U.S. history during which total traffic volume decreased.

“It’s undeniable that consumption patterns are changing and are in transition right now,” says Doug Hecox, a spokesman for the Federal Highway Administration in Washington.

But he stopped short of directly blaming higher gas prices for the reduction in miles driven. “We can’t attribute this anomaly to one variable. It could be the weather that drove people away from driving,” Hecox says.

Besides downsizing and driving less, there are other ways to curtail costs, some of which have little to do with prices at the pump.

Simply lengthening scheduled maintenance intervals can save money. Today’s vehicles can go longer between routine services, such as oil changes.

“There are better quality engines being manufactured with a more precise tolerance and improved lubricants, and the combination of these things allows you to expand certain maintenance intervals,” says Jim Cain, a spokesman for Ford in Dearborn, Mich.

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