What is the average cost per mile to operate a car including depreciation maintenance gasoline and insurance?
AAA estimates by car size (gasoline $2.30 per gallon, 60% city driving)
Small car : 50.5 cents (10,000 miles) to 35.4 cents (20,000 miles)
Medium car : 70.2 cents (10,000 miles) to 45.5 cents (20,000 miles)
Large car : 86.8 cents (10,000 miles) to 54.9 cents (20,000 miles)
*The IRS in 2010 allows 50 cents per mile in computing expense deductions.
*There is a long explanation that a WikiAnswers contributor had published in Mortgage magazine in March of 2005 under their copyright. Keep in mind insurance, gasoline and depreciation are relative to the vehicle.
Here are excerpts:
As a service writer, I am continually asked, "When should I get rid of my car?" Or I am faced with a distressed customer who has spent $600.00 on a car that they think they could buy for $500.00, clamoring that "It's time to get rid of this thing and buy a new one." There were times of internal stress that was felt because our customer was possibly putting money into a vehicle that they thought they shouldn't be, giving the illusion of "ripping off the customer". While we never have a crystal ball to know what will happen in the future, giving the best advice possible is paramount.
We had a customer named Neil who had an old Pontiac 6000 that looked like it was on its last legs: visually as well as mechanically. I told him to lose the car before it nickel-and-dimed him to death any worse. Even though it was cutting my own throat, I owe him my honest opinion. We talked about other options that were out there and he looked around but couldn't quite find what he wanted; besides he liked his old jalopy. It served his needs and was paid for. Faithfully, I would see him every couple months for a few hundred-dollar repair bill. This went on for 5 years. He eventually moved to New England, driving the old rickety but dependable Pontiac wagon. It made me analyze my recommendations a little closer and re-think about when is the time to replace. Meanwhile, I had watched technicians over the years driving some real rust buckets or buying them from a customer because the owner didn't want to spend $500.00 to repair a car, because the car was only "worth" $1000.00. The technician looked at it differently: setting aside the repairs for him would be much less expensive. The shop owner I work for had always presented the answer to the question: "Is it worth fixing?" into a logical light. He would reply to the owner, "Do you like the car?" and then follow up with, "Can you buy a car that you know is the exact same condition as your present car for the same cost as what your repair bill will be?" Many times customers repaired their car with this logic. But living in this disposable society, I still had trouble quoting a repair that rivaled the expected market value of the car itself.
For years I fought with doing the right thing for my customer as well as the right thing for my employer. There had to be a better way of answering these questions based on more than what I would do if it was mine or what I felt was right for them. After all, what is their financial obligation compared to mine? That is part of the equation for whoever's car it is. What I needed to know was how it could be answered with a common denominator. We had a customer that came in and needed $600.00 worth of work on their 1994 Hyundai. They were customers that kept up on the maintenance we recommended and did repairs as required. Being a loyal customer, it seemed reasonable that they would be a good customer to use for number crunching. I added all of their invoices from 36,000 miles to the present mileage. I used these numbers because this is the mileage that the majority of the manufacturers' warranties expire. The current mileage is subtracted from the 36,000-mile warranty expiration point. I then divided the dollars spent by this to get a dollars-per-mile figure. It came out to about $.08/mile. This didn't mean much at this point. So to get a better comparison to what new car is going to be costing the customer; the purchase price is divided by the first 36,000 miles that it is under warranty. Since a new car owner is getting "problem free driving" for 36,000 miles, the purchase price should not be extended beyond this. Using a purchase price of $15,500 plus the sales tax, tags, title brings it to about $17,000 yielding about $.47/mile. This figure does not include oil changes, tire rotation, interest on a loan or an insurance premium increase. Now that means something! I went back to other loyal customers in our database and found they generally pay $.07 to $.13 per mile to run their vehicles. So they save a minimum of $5,100.00 more annually if they drive 15,000 miles.