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THE COST OF OWNING MOTOR VEHICLES
 
 
 

Cost of Owning and Operating Automobiles, Vans, and Trucks

Introduction

Vehicles Used in this Study

Types of Costs

Adjustment of Costs to Other Vehicles and Localities

Applications for Study Data

Opportunities for Cost Saving
 
 
 
 

Tables
 
 
 
 

1  Vehicle and Estimating Bases

2  Subcompact 1991 Model Automobiles

3  Compact 1991 Model Automobiles

4  Intermediate 1991 Model Automobiles

5  Full-sized 1991 Model Automobiles

6  Compact 1991 Model Pickups

7  Full-sized 1991 Model Pickups

8  1991 Model Minivans

9  Full-sized 1991 Model Vans

10 Cost Per Thousand Dollars For Various Financing Plans

11 Gasoline Cost Per Mile At Various Gasoline Prices

   Worksheet to Convert Costs to a Specific Vehicle and

   Locality
 
 
 
 

COST OF OWNING & OPERATING

AUTOMOBILES, VANS & LIGHT TRUCKS -- 1991
 
 
 
 
 
 

Introduction
 
 
 
 

     The cost of owning and operating a motor vehicle is of

major significance, as Americans experience increasing demands

on their incomes. It costs about $14,000 to purchase a 1991

intermediate-sized model year car. If it is driven 128,500

miles by one owner over a period of 12 years, the total cost to

the owner will be about $42,700. During that time it will cost

about $16,300 for depreciation and finance charges, $9,050 to

insure the vehicle, $7,800 (including taxes) for some 6,500

gallons of gasoline, $200 for oil, $5,350 for maintenance and

repair work, $1,250 for fires, $1,650 for parking and tolls,

and, for Maryland drivers, $1,100 for license, registration,

and vehicle excise tax. The pie chart below illustrates a

breakdown of total costs over twelve years for the 1991

intermediate-sized model year car. Tax revenues for gasoline

and oil are used primarily for improvements to roads on which

the vehicle is driven and account for less than five percent of

the total costs. The average annual cost of $3,560 represents

about 12.3 percent of a household's 1991 disposable income.
 
 

     This report updates The Cost of Owning and Operating

Automobiles and Vans -- 1984. It traces selected vehicles in

personal use and their costs through a 12-year lifetime of

128,500 miles using 1991 data. The user is cautioned against

making direct comparisons between the costs reported in this

and previous issues. The study methodology has been modified

(details below). As with earlier reports, costs are based on

operation to typical vehicles in the Baltimore, Maryland,

suburbs. A worksheet for developing costs for the first year of

a vehicle's life in other localities is provided at the back of

this report. Although a vehicle will usually pass through three

or more owners during its life, the cost resulting from

transfer of ownership are not included in this report.
 
 

     The average annual cost of $3,560 represent about 12.3 percent

of a household's 1991 disposable income.
 
 

     Methodology For the Study: The basic methodology for this

study was modified somewhat from the used in the 1984 study.

For the 1991 study, vehicle lifetime mileage was increased from

120,000 to 128,500. The five vehicle classes used for the 1984

study have been retained, and three additional classes have

been added: compact pickup trucks, full-sized pickup trucks,

and minivans. The average age of an automobile (7.8 years) is

higher now than it has been at any time in the post-World War

II period. The average annual mileage per vehicle is

approximately 10,700, with travel decreasing as the age of the

vehicle increases. As in the 1984 study, the cost of the home

garage or a parking facility was omitted. In a suburban

setting, parking facilities range from curb parking to paved

drive ways to carports to fully-enclosed garages, with an

equally wide range in costs. In suburban areas, garage costs

are not usually a factor in automobile purchase or use

decisions. Only costs to the vehicle owner are addressed. The

costs of vehicle emissions and other external costs of vehicle

use are not considered.
 
 
 
 
 
 

Vehicles Used in this Study
 
 
 
 

    Description: The vehicle classes, repair and maintenance

operations, replacement items, insurance, fuel and oil

consumption, taxes, and other costs included in the study and

the values of the factors used to compute these costs are given

in Table 1, Vehicle and Estimating Bases. In the current study,

between two and seven vehicles were selected to represent each

vehicle class.
 
 

     For this study, 29 domestic and imported vehicles were

chosen to represent eight vehicle classes: subcompacts,

compacts, intermediates, and full-sized automobiles; compact

and full-sized pickups; and minivans and full-sized vans. The

selected vehicles represent the most popular nameplates in

their class. For each class, the selected nameplates account

for at least 47 percent of 1990 sales (using the Automotive

News assignment of vehicles to classes). The vehicles selected

are intended to be typical of new vehicles in each size

category, but, because of changing technology, they are

probably not representative of older vehicles in their

respective size classes.
 
 

     The average age of an automobile (7.8 years) is higher now

than it has been at any time in the post-World War II period.
 
 

     The vehicles were equipped as described in Table 1. All

have gasoline engines. The optional equipment selected is that

which the automotive industry reports to be typical for each

vehicle size group. For example, data show that about 92

percent of intermediates have air conditioning. The purchase

price of each vehicle was calculated using dealer cost plus

freight plus an estimate of dealer markup. The markup depends

on many factors--the size of the dealership, the dealer's

inventory situation, the time of year, and the ability of the

buyer to negotiate. For most vehicles, the markup is roughly

half the difference between sticker price and dealer cost.
 
 

     Vehicle Life: Many things, such as individual driving

habits, climate, garage facilities, type and condition of road,

type of use, and sometimes luck, can affect the service life

and operating costs of a vehicle. Most private passenger

vehicles are now staying on the road for at least 12 years; and

the average vehicle accumulates 128,500 miles in these 12

years. The same distribution of these miles over time--12,900

miles the first year, decreasing to 8,200 miles traveled in the

12th year--has been used for all eight vehicle classes. (Annual

mileage actually does vary somewhat by vehicle class, but the

data on how it varies is weak and using different annual

mileages would reduce the comparability of results across

vehicle classes.) The complete mileage distribution is shown in

Tables 2 through 9.
 
 

     The decreasing mileage distribution is consistent with the

average annual miles driven by age of vehicles; but, in normal

circumstances, an individual's need for transportation is

relatively stable from year to year. It is unlikely that an

only car would be driven successively fewer miles each year.

What is more likely is that, as a vehicle ages, it becomes a

second or third family vehicle or its ownership is transferred

to a household that uses it less.
 
 

     The average vehicle is sold or traded two or more times

during its life, often through new or used car dealers. This is

often prompted by the need for or anticipation of repairs.

Dealers serve as quality control judges of the used vehicle

trade. They wholesale those vehicles that require very

expensive or time-consuming work and make the repairs on the

remainder prior to resale. Battery and tire replacements, brake

linings, radiator repairs, body work, and numerous other

replacements and repairs are included in the used vehicle

reconditioning programs of many dealers. The additional work

done under dealer warranty does not impose direct out-of-pocket

expenditures on the vehicle owner, but these costs are

submerged in each vehicle's purchase price. For the purpose of

this report, no effort has been made to separate them.
 
 
 
 

Types of Costs
 
 
 
 

     Some owners may think of costs only in terms of outlays

for fuel, oil, tires and tolls. A more careful examination

shows that some costs occur whether or not the vehicle is

driven, while others are directly related to the amount of

travel. The travel-related group is generally referred to as

operating costs, and the other group as ownership costs.

Analysts often differ on the costs that should be included in

each category. The following defines the terms as they relate

to this study.
 
 

     Ownership Costs: Ownership costs include depreciation,

finance charges, insurance, registration and titling fees, and

any taxes applied to these items. No matter how little a

vehicle is driven, the majority of the cost of each of these

items is incurred.
 
 

     1. Depreciation is the loss of value of the vehicle during

its lifetime due to passage of time, its mechanical and

physical condition, and the number of miles it is driven.
 
 

     National vehicle dealer groups issue vehicle value books

for different regions of the country, usually on a quarterly

basis. These values are determined by a survey of vehicle

selling prices by make and model year in each geographic area.

The values are based on normal travel, so lower or higher

odometer readings will be reflected as higher or lower

remaining vehicle values, respectively. The depreciation costs

in this report represent the projected decline in real value

over time, obtained from such reports and adjusted to exclude

the effect of inflation and the difference between prices

charged by dealers and those obtainable by individuals when

they sell their vehicle.
 
 

     Depreciation is the single greatest cost of owning and

operating most passenger vehicles; however, the cost of

insurance, gas and maintenance are also significant. In the

majority of cases, the age of the vehicle is the most important

factor in determining resale or trade-in value. Other

influences are mileage, brand popularity, body style, size,

color, and the state of the used-vehicle market.
 
 

     Typically, between 25 and 45 percent of all depreciation

occurs in the first year of ownership. Much of this occurs as

soon as the vehicle is purchased (an individual cannot get as

much for a car as a dealer can), and there is additional

depreciation when the next year's models become available.

Purchasers of used vehicles also will encounter significant

depreciation during their first year of ownership. The tables

represent the case in which a vehicle is owned by the same

family for all twelve years, so the extra depreciation that

occurs in the first year of ownership of a used vehicle is not

shown. For new cars, the percentage of depreciation occurring

in the first year is highest for compact pickups and subcompact

automobiles and lowest for minivans.
 
 

     Depreciation rates drop sharply in the second year (to

7-10 percent of the purchase price) and much more gradually

after that. Since vehicles generally are driven less as they

age, depreciation cost declines more slowly when it is

expressed on a per-mile basis than as an annual cost. For a

$13,715 intermediate-sized car, depreciation in the first year

is about $4,350. or 33.7 cents per mile; while in the second

year it is about $1,270, or 10.1 cents per mile, and in the

12th year it is $430, or 5.3 cents per mile. If the car is kept

for 12 years, overall depreciation averages 10.7 cents per

mile.
 
 

     2. Finance Charges are based on a typical interest rate of

10.5 percent, a 4-year financing term and a 25 percent down

payment. However, since a number of options are available,

methods are provided so that readers can approximate their own

costs with relative ease. Most vehicle buyers either pay

interest on money they borrow to buy their vehicles, or they

forego interest they would have earned if they elect to use

savings or other investments to pay for the vehicles outright.
 
 

     Lending institutions and vehicle dealerships have various

financing plans available. Institutions may differ as to the

portion of the vehicle cost they are willing to finance, the

rate of interest charged, the length of the loan term. These

conditions may depend upon whether the vehicle is new or old.

Dealers are sometimes willing to provide financing at below

market interest rates, but recipients of such subsidized loans

actually pay for them by foregoing a cash payment from the

dealer or otherwise paying a higher purchase price for their

vehicle.
 
 

     A more careful examination shows that some costs occur

whether or not the vehicle is driven (ownership costs), while

others are directly related to the amount of travel (operating

costs).
 
 

     Interest charged should be considered in the cost of

owning a vehicle. The lender will provide the total interest

charges, which may be divided by the accumulated miles of

travel for the length of the loan. For a 4-year loan, total

interest charges would be divided by 49,700 miles. The

computation will give the cost-per-mile figure that should be

added to each of the 4-year totals shown in the tables.
 
 

    The computation of interest lost on savings is more

difficult. The cash payment for the purchase of a vehicle, the

type of savings plan, the current rate of interest, and the

period of time for monthly deposits to equal the cash payment,

will vary greatly among purchasers. Savings institutions will

provide the amount of interest that could be earned by the

deposit of an amount equal to the cash payment for the selected

period of time and the amount of interest that can be earned if

equal monthly amounts are paid into the savings account for the

same period. The difference between these two interest amounts

is the interest lost by paying cash for the purchase of a

vehicle.
 
 

     Alternative methods of financing a new vehicle purchase

can make important cost difference; and merits of different

plans should be weighed carefully before a particular plan is

selected.
 
 

     If $12.000 is needed to purchase a vehicle and four years

(48 months) is selected as the period of time needed to save

this amount, the monthly payment into savings would be $250

($12,000 divided by 48). The difference in interest earned by

these payments and the interest earned on $12,000 on deposit

for four years is the interest lost by paying cash. At five

percent interest compounded quarterly, $12,000 on deposit for

four years would earn $2,638 in interest. This would be lost if

the money were withdrawn from savings to pay cash for a car. To

replace the $12,000 in savings over four years, the purchaser

would have to deposit $250 at the end of each month. These

deposits would earn $1,248 in interest. The difference between

these two interest amounts ($2,638 - $1,248 = $1,390) would be

the interest cost of paying for the automobile purchase from

savings.
 
 
 
 

     Alternative methods of financing a new vehicle purchase

can make important cost differences; and merits of different

plans should be weighed carefully before a particular plan is

selected. Table 10 shows the cost per thousand dollars for

financing a vehicle purchase through a loan and financing

through a savings withdrawal at various interest rates.
 
 

     3. Insurance Costs are determined by vehicle type, the

amount and type of coverage selected, the purpose for which the

vehicle is used, the operator's driving record, and the

location in which it is garaged. Insurance rates may also be

affected by unusually high or low annual mileage driven.
 
 

     Automobiles are continuously exposed to the possibility of

damage, whether on the highway or parked. The large number of

vehicles on the roads and streets and in parking lots make each

vehicle susceptible to accident involvement. The cost of

repairing even minor damage has continued to increase and is

reflected in the insurance rates. For comparable coverages, the

insurance rates used for automobiles in this study average

about 50 percent more than they did in 1984 (though the rates

for full-sized vans are almost unchanged).
 
 

     The insurance coverage in this study for all vehicles

except full-sized vans includes $20,000/$40,000 bodily injury,

$10,000 property damage, $2,500 personal injury protection, and

$20,000/$40,000/$10,000 uninsured motorist coverage. This

coverage is the minimum required by law in the State of

Maryland and according to State officials is the most common

coverage purchased. For full-sized vans, the insurance coverage

includes $300,000 single limit liability, $2,500 personal

injury protection, and $50,000 uninsured motorist coverage. The

higher coverage for full-sized vans reflects an assumption that

they will be used primarily for van-pool commuting. Coverage

reflects the cost for a policy where the driver has no moving

violations or accidents in the last 3 years, no youthful

drivers are covered and there is no multi-vehicle discount.

Coverage for all vehicles also includes $100 deductible

comprehensive coverage and $250 deductible collision coverage.

Collision coverage is assumed to be dropped after the first 5

years. The deductibles are higher than those used in 1984,

reflecting the effects of inflation and a trend to controlling

premiums by increasing deductibles. There is a considerable

saving to the insurance company when a large number of small

claims do not have to be processed. The saving is passed on to

the insured in lower rates.
 
 

     All coverages with the exception of collision are assumed

to remain in effect for the full 12-year period covered. Some

owners of older vehicles do not obtain comprehensive or

collision coverage, either because they choose to self-insure

or because their insurance company does not offer these

coverages on older vehicles.
 
 

     4. Registration, Title and Inspection Fees are fees

collected by the State and some local subdivisions in which the

vehicle is registered. All States charge a fee for

registration, and some charge an additional fee for obtaining

title to a vehicle when it is first purchased (whether new or

old). Also, some States charge fees for emissions or safety

inspections performed by a State agency or a State contractor.

The fees shown in Tables 2 through 9 consist of an annual

registration fee varying with vehicle weight, a biennial $8.50

emissions inspection fee, and a $12 titling fee applied when

the vehicle changes ownership (assumed to occur only in Year

1).
 
 

     5. Vehicle Taxes consist of sales taxes and personal

property taxes levied on the value of the vehicle by some

States and local subdivisions as well as the Federal

"gasguzzler" tax and the Federal luxury tax levied on the

portion of a new-car sales price that exceeds $30,000. Tables 2

through 9 show the effect of a five percent "excise titling

tax" applied when the vehicle changes ownership (assumed to

occur only in Year 1 ). None of the vehicles selected for this

study are subject to either of the Federal taxes.
 
 

     Operating Costs: Operating costs include scheduled

maintenance and unscheduled repairs and maintenance, fuel, oil,

tires, parking, tolls, and the taxes applied to these items.

The majority of each of these costs are a function of vehicle

usage.
 
 

     1. Scheduled Maintenance includes the services shown in

the owner's manual. Generally, the suggested maintenance

intervals are expressed in miles driven or period of time

owned. The services include maintenance of the cooling system,

oil changes, safety checks, tuneups, and lubrication. When the

owner's manual recommends that an item (e.g., brakes) be

checked for wear, the cost of the labor to make such an

inspection is considered scheduled maintenance. If a repair is

found to be necessary, the cost of the replacement parts and

the labor to install them are included in nonscheduled repairs.
 
 

     2. Unscheduled Repairs and Maintenance shown in this

report were estimated by taking data on total costs for repairs

and maintenance (from the 1989 Consumer Expenditure Survey),

adjusting for differences across vehicle classes, and

subtracting the cost of scheduled repairs and maintenance. The

estimated costs exclude the cost of any repairs that are done

by a dealer when a vehicle is traded but that would have to be

performed by the owner if the vehicle is kept for the full 12

years.
 
 

     About 65 percent of repair and maintenance costs are for

labor and 35 percent are for parts. A Baltimore, Maryland labor

rate of $48.67 per hour was used. Both the labor rate and the

prices for parts include markups that cover the cost of

buildings, equipment, supervision and other costs of doing

business. Actual labor costs for maintenance and repairs vary

widely. This factor should be taken into account in using the

results of the study.
 
 

     Many dealers offer an optional extended warranty, usually

5 years/50,000 miles, which, if chosen by the vehicle

purchaser, would have a bearing on costs for major unscheduled

repairs. The optional extended warranty is not included in this

study.
 
 

     Some owners of older vehicles do not obtain comprehensive

or collision coverage, either because they choose to self-

insure or because their insurance company does not offer these

coverages on older vehicles.
 
 

    Some maintenance jobs, such as replacement of radiator

hoses or fan belts, are relatively easy and present the vehicle

owner an opportunity to save by performing them

himself/herself. Many vehicle owners, however, opt to pay

professional mechanics for these services.
 
 

     3. Fuel is a major cost item for vehicles of all sizes.

For the gasoline-engine vehicles used in this study, the

difference in fuel costs between the 1991 full-sized car and

the subcompact over the lives of the vehicles is $2,690

(including taxes). As shown in Tables 2 and 5 respectively,

over the first 3 years, gasoline will cost $791 more for the

full-sized car than for the subcompact. This comparison is more

meaningful when considering the full-sized car provides only

about 35 percent more interior space for the nearly 50 percent

higher fuel cost.
 
 

     A cost of $1.196 per gallon, including State and Federal

taxes, for unleaded regular gasoline was used for this study.

This represents an 80/20 mix of self-service and full-service

prices for the study area (in line with the average mix of

self-service and full-service purchases). Full-service costs in

the Baltimore area are about 28 cents per gallon higher than

the price used in this study and self-service costs are about 7

cents per gallon lower (though the difference averages only

about 22 cents per gallon nationally).
 
 

     Fuel is a major cost item for vehicle of all sizes. For

the gasoline-engine vehicle used in this study, the difference

in fuel costs between the 1991 fullsized car and the subcompact

over the lives of the vehicles is $2,690 (including taxes).
 
 

     The gasoline costs shown in Tables 2 through 9 can be

adjusted to reflect changes in the price of gasoline. For each

one cent increase in the cost of a gallon of gasoline, the

total cost per mile for the full-sized car would increase

0.0558 cents. This is computed by dividing the total cost per

mile of gasoline (4.85 cents) plus State and Federal taxes

(1.03 cents and 0.79 cents) by $1.196, the cost per gallon used

in this study. Table 11 show the gasoline cost per mile for

each class of vehicles for a selected range of gasoline prices.
 
 

     4. Oil Costs for a new or relatively new vehicle are

mainly dependent on the car manufacturer's instructions for oil

changes, because little, if any, oil is burned by these

vehicles. The oil change interval is 7,500 miles for all five

study vehicles. The subcompact cars and compact pickups have an

average 4.7 quart capacity, the full-sized pickups and

full-sized vans have an average 5.5 quart capacity, and all

other vehicles have a 5-quart capacity.
 
 

     5. Tires receive 514,000 miles of wear when an automobile

is driven 128,500 miles. All vehicles have radial fires and all

replacement tires are assumed to be radial. The number of

replacement tires is based on a life expectancy of 40,000 miles

for radial tires. Tables 2 through 9 presume that tires are

replaced in Years 4, 7 and 12 (i.e., at odometer readings of

40,000, 80,000 and 120,000) causing small spikes in the

operating cost figures for those three years. In practice, the

timing of these three spikes will depend upon the

tire-replacement schedule actually followed, rather than the

one assumed in this study.
 
 

     6. Parking and Tolls include metered curb parking, fees

charged in parking lots, and toll charges for using private or

public highways, tunnels, and bridges.
 
 

     7. Taxes on fuel and oil are the primary component of

operating cost taxes. These taxes are paid on a per-gallon

basis. The Federal gasoline tax is 14.1 cents per gallon. The

Maryland gasoline tax is 18.5 cents.
 
 
 
 

Adjustment of Costs to Other Vehicles and Localities
 
 
 
 

     In this study, all vehicles use regular unleaded gasoline

at a cost, in suburban Baltimore, of $1.196 per gallon,

including taxes. If the cost in another area is $1.10, persons

living there can estimate their own operating costs by

adjusting the gasoline cost figure to reflect the lower price.

Procedures for accomplishing this are described in the section

titled Fuel. Similar adjustments can be made for other cost

items.
 
 

    The costs most likely to change in the short run and to

need adjustment for specific geographic locations are fuel

prices, insurance premiums, taxes and fees, repair labor rate,

tolls, and parking charges. Also, the market value of vehicles

can differ somewhat among regions.
 
 

     In general, rural costs are lower than suburban or urban

costs. This is evident in insurance premiums, primarily because

vehicles in rural areas are exposed to less traffic and fewer

opportunities for accidents. Retail costs and labor rates are

also usually lower in rural areas. Operating costs (fuel, oil,

tires, repairs, etc.) per mile for vehicles in rural operation

also tend to be lower than for comparable vehicles in suburban

use because there are fewer traffic control devices and less

congestion on rural roads.
 
 

    The worksheet included at the back of this report has been

prepared as a guide so that costs for the first year of a

vehicle's life can be developed for specific vehicles and for

other localities.
 
 

    If current per mile costs for an older vehicle are desired,

the appropriate column of Tables 2 through 9 to use is the

first one that shows a cumulative mileage that is at least

equal to the mileage currently on the vehicle's odometer. (If

costs over the next year are desired, an additional allowance

should be made for miles expected to be driven over the next

six months.) This column can be used to identify cost factors

for everything except depreciation. Since depreciation is

dependent on both car age and mileage, local used car prices or

"book" values can be used. The figures shown for fuel and

scheduled maintenance may also be slightly low for a vehicle

built several years ago, since these figures are for vehicles

with 1991 technology.
 
 

    It should be noted that a family's annual auto usage does

not usually match the mileage distribution in the tables. As

mentioned before. a family would drive approximately the same

number of miles each year. while the tables show a decreasing

annual mileage pattern. This is because the mileages used in

constructing Tables 2 through 9 represent averages for annual

miles of all new vehicles, all one-year-old vehicles, all

two-year-old vehicles, etc. Each of these averages represents a

mix of vehicles that may have been purchased new and used and

may serve as first vehicles, second vehicles, third vehicles,

etc. If the family customarily drives 12,900 miles per year, at

the end of three years its total mileage would be 38,700.

Tables 2 through 9 show the accumulated mileage for Years 1-3

as 37,800. The total miles a car has been driven may not always

be a good measure of its wear or condition. A long highway trip

produces less wear than the same number of miles driven around

town in stop-and-go traffic.
 
 

    The total vehicle cost per mile is lower for the

high-mileage driver because depreciation in the early years of

a vehicle's life is determined more by age than by miles and

because some of the annual charges, such as insurance, do not

increase in direct proportion to mileage. However, most

insurance companies charge lower rates for pleasure and

recreational uses of vehicles and higher rates for vehicles

used directly for work or in relation to business, and many

companies apply a surcharge for high-mileage drivers in both

categories.
 
 

    To some degree, the purpose for which a vehicle is used and

the circumstances of its use will dictate the vehicle-cost

pattern. For example, the high-mileage driver will find that

tire replacements should be moved to earlier years than those

shown in this study.
 
 
 
 

Applications for Study Data
 
 
 
 

    Choosing Your Next Vehicle: Choice of an

automobile--full-sized, intermediate, compact, or

subcompact--is based on more than the consideration of cost.

For the motorist who needs the space provided by the full-sized

car because of a large family, car-pool needs, or equipment to

be carried, the economic and size advantages of smaller cars

must be foregone. If space needs are not compelling, cost

considerations may lead the motorist to choose a smaller car.

Dollar depreciation, financing and fuel costs are substantially

lower for subcompacts and compacts. Also, repair costs

generally are lower for smaller cars, tires cost less, and, in

some States, registration fees are lower. Non-cost advantages

are maneuverability in city traffic and ease of curb parking.

The advantages of larger cars in capacity, comfort, safety and

possibly status can be compared to the dollar costs incurred to

obtain these benefits.
 
 

     To some degree, the purpose for which a vehicle is used

and the circumstances of its use will dictate the vehicle-cost

pattern.
 
 

     When To Trade In: There is no set answer to the question

of when to trade in or to sell a vehicle. Monetary

considerations are only part of the answer. Vehicle style,

size, mechanical features, dependability, as well as the

availability of money. are also factors in the decisions

regarding when and which vehicle to purchase. A vehicle owner

can minimize the depreciation costs by keeping the vehicle

longer. The "annual trader" drives a current model vehicle all

the time, but depreciation for the intermediate-sized car will

cost about $52,000 over a 12-year period (12 times the first

year depreciation). A "two year trader" pays about $34,000 in

depreciation. This is a saving of $18,000 from the "annual

trader's" costs, and even more can be saved by becoming a

"three-year trader." Of course, consideration must be given to

the outlays for necessary repairs and replacement tires when

the vehicle is kept longer.
 
 

    Once the vehicle-use pattern is determined, the owner may

be able to relate costs to those shown in this report and to

decide when it will be most advantageous to trade vehicles. Of

course, comfort, dependability, and appearance are important to

most vehicle owners, and these weigh heavily in the purchasing

decision.
 
 

     Ridesharing is another effective way to reduce automobile

expenses . . . The cost for an intermediate car operator by a

single driver is 33.25 cents per passenger mile compared to a

cost of 8.31 cents per passenger mile for the same car with 4

occupants.
 
 

     Business Use Of Vehicles: This study is not intended to

establish the basis for determining an appropriate

reimbursement for costs associated with use of an employee's

personal vehicle for business purposes. The results of the

study may be useful as a general guide for determining

reimbursement rates; however, many factors, such as higher

annual mileage and special requirements pertaining to purchase

or upkeep of the vehicle related to use for business purposes

should also be taken into account. Information concerning

reimbursement for private vehicle use can be obtained from

business travel advisory services that have made studies of

costs for specific vehicles and groups of vehicles under

various conditions of use.
 
 
 
 

Opportunities for Cost Savings
 
 
 
 

    Vehicle costs can be minimized by selecting the smallest,

most economical and fuel-efficient vehicle consistent with a

family's needs and by avoiding unnecessary use.
 
 

    During the first year of operation, intermediate-sized cars

have daily owning and operating costs of $21.35. The portion

attributable gasoline costs, including taxes, amounts to $2.14.
 
 

     Throughout the 12-year life of these vehicles, fuel and

oil costs, including taxes, would account for about 16 percent

of the total cost for subcompact cars, about 18 to 20 percent

of total costs for other cars, compact pickups, and minivans,

and 24 or 25 percent for full-sized pickups and full-sized

vans. These figures indicate that substantial savings can be

achieved by conserving fuel. This can be accomplished through

more efficient driving habits, careful planning to eliminate or

combine trips, proper vehicle maintenance, and ridesharing.

Fuel efficiency should also be considered when selecting a new

vehicle both in determining the size of vehicle and the

particular model within a size class.
 
 

     The U.S. Department of Energy has published the "1992

Gasoline Mileage Guide" containing the Environmental Protection

Agency's fuel economy estimates. Consumer Reports also

publishes fuel-efficiency estimates for individual vehicles as

well as a qualitative information on relative costs for

depreciation and for repair and maintenance.
 
 

     Ridesharing is another effective way to reduce automobile

expenses. Most people find that work trips are the most

convenient for ridesharing. For example, if an auto is

principally used for the work trip, and the individual

rideshares with another and uses that auto 50 percent of the

time, mileage and depreciation will likewise be reduced.

According to the data generated for this study, the cost for an

intermediate car operated by a single driver is 33.25 cents per

passenger mile compared to a cost of 8.31 cents per passenger

mile for the same car with 4 occupants. For a 9 person van-pool

the cost drops even further to 4.95 cents per passenger mile.

In addition, use of "High Occupancy Vehicle" lanes not only

speed the work trip but reduce depreciation on an automobile,

by avoiding daily "stop and go" travel on congested highways.

Data from the Federal Highway Administration's 1990 Nationwide

Personal Transportation Survey show that travel to work and

back comprises 32.8 percent of all personal driving, providing

the opportunity for substantial cost savings by ridesharing.
 
 
 
 

Table 1
 
 
 
 

Vehicle and Estimating Bases
 
 
 
 

Vehicles and    All vehicles are 1991 models with

Equipment       gasoline engines, automatic transmission, power

                disc brakes, airconditioning, tinted glass, FM

                stereo, speed control, rear window defogger,

                tilt steering wheel.
 
 

                Additional equipment: Subcompact automobiles (6

                nameplates) - power steering

                Compact automobiles (4 nameplates) - power

                steering

                Intermediate automobiles (6 nameplates) -

                power steering

                Full-size automobiles (3 nameplates) - power

                steering, cassette deck, pulse windshield

                wipers, power windows, power door locks, left

                remote mirror, and white sidewalls

                Compact pickups (3 nameplates) - none

                Full-size pickups (2 nameplates) - power

                steering, overdrive, cassette deck, pulse

                windshield wipers, power door locks, left

                remote mirror, and white sidewalls

                Minivans (3 nameplates) - power steering and

                overdrive

                Full-size vans (2 nameplates) - same as

                full-size pickups plus power windows
 
 
 
 
 
 

Finance         Charges are based on an interest rate of 10.5

                percent, a 4-year loan term and a 25 percent

                down payment.
 
 
 
 

Repairs and     Scheduled - as specified in owner's manuals.

Maintenance     Assumed to be performed by professional

                mechanics. Unscheduled - derived as a ratio of

                unscheduled to scheduled maintenance using data

                from the 1989 Consumer Expenditure Survey.

                Excludes cost of repairs performed under normal

                or extended warranty, repairs performed by

                dealers when traded, and repairs of collision

                damage.
 
 
 
 

Replacement     Twelve new radial tires purchased during the

Tires           life of the vehicle.
 
 
 
 

Fuel             Price: $1.196 per gallon of gasoline,

                 including taxes.
 
 

                 Average gasoline mileage:
 
 

                 Subcompacts:        26.23 mpg

                 Compacts:           22.86

                 Intermediates:      19.87

                 Full-size cars:     17.99

                 Compact pickups:    21.69 mpg

                 Full-size pickups:  14.48

                 Minivans:           17.54

                 Full-size vans:     11.23
 
 
 
 

Oil              One oil change every 7,500 miles. One extra

                 quart of oil assumed between changes.
 
 

                 Average capacity: 4.7 quarts for subcompacts

                 cars and compact pickups; 5.5 quarts for

                 full-size pickups and full-size vans; 5.0

                 quarts for all other vehicles.
 
 
 
 

Insurance        Full-size van: $300,000 single limit

                 liability, $2,500 personal injury protection,

                 $50,000 uninsured motorist, $100 deductible

                 comprehensive, and $250 deductible collision

                 coverage for the first 5 years of the life of

                 the vehicle.
 
 

                 All other vehicles: $20,000/$40,000 bodily

                 injury, $10,000 property damage, $2,500

                 personal injury protection, $20,000/$40,000/

                 $10,000 uninsured motorist, $100 deductible

                 comprehensive, and $250 deductible collision

                 coverage for the first 5 years of the life of

                 the vehicle. Coverage is the minimum required

                 by law in the State of Maryland and according

                 to State officials is the most common coverage

                 purchased.
 
 
 
 

Parking          Includes average of 1.19 cents per mile for

and Tolls        parking and 0.09 cents for tolls ($138 per

                 year for a vehicle driven 10,700 miles per

                 year).
 
 
 
 

Taxes            Includes taxes at 1991 rates: Federal excise

and Fees         tax on gasoline (14.1 cents per gallon)

                 effective December 1, 1990; Maryland tax on

                 gasoline (18.5 cents per gallon) effective

                 June 1, 1987; Maryland excise titling tax (5

                 percent on retail value of vehicle); Maryland

                 sales tax (5 percent on other retail items);

                 Maryland title fee ($12) if vehicle is

                 financed, registration fee ($27-$40.50,

                 depending on weight), and emissions inspection

                 fee ($8.50 in alternate years).
 
 

[Table Omitted]
 
 

[Table Omitted]
 
 

[Table Omitted]
 
 

[Table Omitted]
 
 

[Table Omitted]
 
 

[Table Omitted]
 
 

[Table Omitted]
 
 

[Table Omitted]
 
 

[Table Omitted]
 
 

[Table Omitted]
 
 

[Table Omitted]
 
 

Worksheet to Convert Costs to a Specific Vehicle and Locality
 
 
 
 

Your Costs
 
 
 
 

1.   Amount paid for your car                        $________
 
 

2.   Cost of a tire to fit your car                  $________
 
 

3.   Price of gasoline per gallon (including tax)    $________
 
 

4.   Price of oil per quart (including tax)          $________
 
 

5.   Annual cost of your insurance                   $________
 
 

6.   Estimated cost of your daily parking            $________
 
 

7.   Estimated annual tolls                          $________
 
 

8.   State registration fee for your car             $________
 
 

9.   Sales/titling/gas-guzzler and/or personal

     property tax                                    $________
 
 

10.  Mechanics labor charge per hour                 $________
 
 

11.  Monthly interest cost ((Monthly payment

     x Number of months for loan) less (Amount

     of loan + Number of months for loan))           $________
 
 

12.  Term of your auto loan                          $________
 
 

13.  Your mileage for the year                       $________
 
 
 
 

Estimated First Year Cost
 
 
 
 

Ownership Costs (First Year)

                                            Total     Cost per

                                                      (Total

                                                       Column +

                                                       line 13)

14. Depreciation (37%2 of line 1)          $________  ________
 
 

15. Insurance (line 5)                     $________  ________
 
 

16. Registration fee (line 8)              $________  ________
 
 

17. Financing (12 x monthly interest cost) $________  ________

18. Sales/titling, and/or property tax

    (line 9)                               $________  ________
 
 

19. Inspection fee (include only for

    years in which inspection is

    required)                              $________  ________
 
 
 
 

Operating Costs3 (First Year)
 
 
 
 

20. Gasoline (Annual gallons

    used x line 3)                         $________  ________

21. Oil (line 13 + oil change interval

    x oil capacity x line 4)               $________  ________

22. Maintenance and Repair ((0.35 + 0.65

    x line 10 + $48.67) x first year

    scheduled and unscheduled repair and

    maintenance costs from appropriate

    table (2-9) for your vehicle class)    $________  ________
 
 

23. Parking (240 x line 6) or actual

    days parked x daily cost               $________  ________
 
 

24. Tolls (line 7)                         $________  ________
 
 

25. TOTAL COST (Add lines 14-25)           $________  ________
 
 
 
 
 
 
 
 

1 If you wish to compute your costs for other than the first

  year, note additional instructions in section titled

  "Adjustment of Costs to Other Localities."
 
 

2 Use 37% for subcompact, 35% for compact, 30% for

  intermediate, 29% for full-size car, 37% for compact pickup,

  28% for full-size pickup, 26% for minivan, and 34% for

  full-size van.
 
 

3 All maintenance and repair, both scheduled and nonscheduled,

  are included in operating costs.
 

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