With the price of gasoline fluctuating between costly and downright
expensive the last few years, it’s not surprising that fuel economy is a
primary buying consideration among new-car shoppers in all market
segments. While motorists can indeed salve the sting they’re feeling at
the pump by shopping for a vehicle that gets more miles per gallon, they
might ultimately wind up losing money if they’re ignoring other
long-term operating costs.
“Car shoppers should set their sights on the long-term cost to own a
vehicle since its factors such as depreciation, insurance cost and
maintenance will significantly drive up the cost of owning a vehicle
over time,” says Alec Gutierrez, senior market analyst of automotive
insights for Kelley Blue Book. “As an
example, both the Volkswagen Passat and Honda Accord can be purchased
for approximately $20,000 brand new; however, the Volkswagen Passat has a
five-year ownership cost of $38,636, which is nearly $4,000 more than
the Accord’s $34,564.”
To help consumers make more cash-sensible car-buying decisions, KBB recently announced its annual Total Cost of Ownership Awards in 22 separate vehicle classes. The kbb.com
website tracks new vehicles’ depreciation, fuel costs, insurance costs,
financing, repairs, maintenance, and average state sales taxes and
registration fees over a five-year ownership period, and even computes a
per-mile expenditure for easy comparison. We’re featuring the 22
vehicles cited by KBB for low ownership costs in their respective
classes in the accompanying slide show.
In Pictures: Cheapest 2013 Cars To Own.
The least-expensive model-year 2013 car to own according to KBB is
the diminutive Scion iQ subcompact with a base price of $16,250. When
all long-term ownership costs are considered, it’s projected to cost an
average owner a total of $27,011 over a five-year ownership period,
which amounts to $0.36/mile. While few would consider the $76,825
Porsche Panamera luxury sedan “cheap,” it nonetheless beats all comers
in the high-end luxury segment with a low (relatively speaking) per-mile
ownership cost of $1.12/mile.
Remarkably, one car on KBB’s list, the Chevrolet Volt electric
vehicle, actually registers a projected five-year ownership cost (at
$37,052) that’s slightly less than its retail purchase price ($39,995).
According to KBB’s Brenna Robinson, this is largely due to the $7,500
one-time federal tax credit granted to Volt buyers.
Among brands, KBB cites Mazda as offering the lowest overall ownership costs in the industry, with Lexus
beating the competition in that regard among luxury automakers. Both
brands get high marks for low depreciation, fuel and maintenance and
repair costs across their full vehicle lines.
Generally, the more expensive the vehicle, the more important
differences in certain ownership costs become over time, simply because
there’s more money at stake. “Buyers looking for a compact or subcompact
should be primarily interested in fuel costs, as it makes up the bulk
of total ownership costs,” Gutierrez explains. “Those looking for a
high-end vehicle will want to consider depreciation, insurance,
maintenance and repairs as the most critical factors.”
In Pictures: Cheapest 2013 Cars To Own.
Depreciation – the difference between a car’s purchase price and its
resale value – is the killer here. As an example, KBB estimates the Mercedes-Benz
S-Class can be expected to lose a whopping $62,000 in value over the
course of five years. It always pays to choose a model that’s predicted
to hold its value better over time, based on economic factors,
historical data and plain old supply and demand issues. (This is
likewise important for those leasing a vehicle because payments are
largely based on its projected value at the end of the contract’s term.)
According to industry sources, large cars, luxury cars and minivans
typically don’t hold their value as well these days as do compact
passenger cars and sporty coupes
A five percent difference in resale value after five years between
competing $50,000 cars would represent a $2,500 return at trade-in time,
assuming both cars are kept in good condition with average mileage.
However, differences in resale values among similarly priced models tend
to narrow the longer one keeps a vehicle, and can become negligible if
you’re the type of person who literally “runs a car into the ground.”
If you’re financing the cost of a new vehicle be sure to compare loan rates to minimize interest costs. Bank Rate Monitor currently cites a low of 1.49 percent for a 60-month new-car
