In 2023, the annual cost of owning a car was approximately $12,182 for 15,000 miles of driving. This total encompasses both fixed costs such as insurance, registration, taxes, depreciation, and finance charges, and variable costs such as fuel, maintenance, and tires.
What are the costs of owning a car?
Owning and operating a car involves both fixed and variable costs. Fixed costs, also known as ownership costs, do not change based on how much you drive and include insurance, license, registration, taxes, depreciation, and finance charges. Variable costs, also known as operating costs, involve the physical aspects of vehicle operation and include gasoline, maintenance, and tires.
How have these costs changed over time?
Data stretching back to 1975 shows shifts in the costs of owning a car. Here’ are the inflation-adjusted average costs per 15,000 miles driven per year[1]:
- 1975: Total cost was approximately $12,199, with fixed costs at 55% and variable costs at 45%.
- 1985: Total costs fell to $9,866, with fixed costs increasing to 68%.
- 1995: Total costs increased to $12,366, maintaining a similar cost structure.
- 2005: Total costs hovered around $13,121, with fixed costs slightly reduced to around 66%.
- 2015: Total costs amounted to $11,182, with fixed costs making up 70%.
- 2023: Total costs were $12,182, with fixed costs comprising approximately 68%.
What’s driving the increase in ownership costs?
Over the years, fixed costs of car ownership — such as insurance, which rose 18.9% between November 2022 and 2023 — have increased relative to variable costs like gas and maintenance. This shift might be partly due to changes in how car ownership costs are calculated, rather than the costs themselves. Notably, the cost analysis only began including expenses for maintenance, repairs, and tires in 2017. While the above data provides some insights, it is not sufficient to make definitive conclusions.
Additionally, variable costs, particularly gasoline, have also escalated. From July 2019 to July 2023, gas prices rose by 10%—15% after adjusting for inflation across regions.
Where does this data come from?
This data comes from the Bureau of Transportations Statistics dataset on the average cost of owning and operating an automobile, which has data extending back to 1975, tracking the fixed and variables costs of car ownership overtime. The methodology behind this process has changed several times, as outlined in the footnote below.
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[1] Comparing car ownership costs over different periods is complex due to changes in methodology in 1985, 2004, and 2017. Initially, cost data was based on a single mid-sized American car. After 1985, it covered three different models, which better reflected the market. In 2004, the American Automobile Association (AAA) introduced a method that captured real-world usage over five years and 75,000 miles, including a broader range of expenses and specific insurance details. These adjustments mean that cost data from different years might not be directly comparable because of the different methods used.
