AAA study pinpoints depreciation figures and cost-to-own new vehicles in 2018

AAA looked to explain that vehicle calculation dealerships and finance companies know well, but the average consumer might not understand — depreciation.

While dealerships have their run lists from auctions, and finance companies have scorecards, a study released on Thursday from AAA pinpointed depreciation as the largest expense associated with purchasing a new vehicle, computing that cost at more than $3,000 per year.

And like dealerships and finance companies understand, too, AAA’s 2018 Your Driving Costs study acknowledged that depreciation can be influenced by a number of factors, including shifting consumer preferences.

“New vehicles offer the latest designs, cutting-edge technologies and warranties that offer peace-of-mind,” said John Nielsen, AAA’s managing director of automotive engineering and repair. “But, car owners that like to change vehicles frequently should be thinking about the resale value — not just the purchase price — when choosing their next ride.”

AAA’s analysis found the average cost to own and operate a new vehicle in 2018 is $8,849 per year. The figure is calculated based on the cost of fuel, maintenance, repairs, insurance, license/registration/taxes, depreciation and interest on financing. The study examined 45 top-selling 2018 model-year vehicles across nine categories.

AAA’s annual analysis found demand for sedans has slipped as American appetite shifts to SUVs and pickup trucks. As a result, depreciation costs of these once-popular vehicles increased up to 13 percent as compared to last year.

Electric and hybrid vehicles, however, have seen a gain in popularity with 20 percent of Americans saying they will likely go electric for their next vehicle purchase, up from 15 percent the previous year.

This year, these vehicles also saw a dip in depreciation and offer many cost benefits such as lower repair and maintenance bills, making going green a more affordable choice than in years past.

AAA closed with one final point — again one that dealerships and finance companies understand quite well if consumers want to avoid a big depreciation hit

“The secret to minimizing depreciation costs?” continued Nielsen. “Keep your car for a long time and keep it well-maintained or even consider buying a quality, pre-owned vehicle.”

*Based on 15,000 miles driven annually. Source: AAA