The AAA’s 2018 report found that a typical American household driving about 15,000 per year would spend 58.99 cents per mile for every mile driven. That works out to be $8,848.50 a year to drive a car to work, to the grocery store, and to your child’s afternoon soccer practice.
If it is helpful you can think about it like this. For every $1 you spend on automobile transportation you can go about 1.7 miles.
The AAA looks at several factors contributing to the cost of owning an automobile in the United States. These factors include the cost of fuel; maintenance, repairs and tires; automobile insurance; license, registration, and taxes; depreciation; and finance charges.
For each factor, the AAA uses a published method for defining the cost. For example, “depreciation is based on the difference between the new-vehicle purchase price and the estimated trade-in value at the end of five years and 75,000 miles.”
Miles Driven and Type of Automobile
Some American car owners can do much better. The 58.99 cents per mile cost described above is an average across all automobile types. If a commuter chooses to drive a more efficient and, perhaps, less expensive car, the cost can be considerably less.
A sedan like a Honda Civic or Chevrolet Cruze should cost about 45.18 cents per mile or $6,777.00 per year to own and operate when driven 15,000 miles annually, according to the AAA.
In a small sedan, each $1 invested in transportation can take you about 2.2 miles.
Of course, the opposite is also true. If someone chooses to drive a relatively less efficient or more expensive vehicle, the cost can be more. Driving a big truck costs a lot more than getting around in a Fiat 500.
The vehicle is not the only contributing factor. How much a person drives also impacts the cost of ownership and the average cost per mile.
For example, let’s return to the average figures for all types of automobiles. The 58.99 cent per mile number used earlier in this article is based on driving 15,000 miles in a year. It divides the vehicle cost, financing, and insurance (among other things) evenly over each of those 15,000 miles. If a person drove more, the cost per mile for financing, as an example, would actually go down.
For this reason, the AAA reported that a typical American driving 20,000 miles a year would spend 51.06 cents per mile owning and operating the average automobile. That is more than seven cents per mile less than someone driving 15,000 miles a year.
Of course, the driver going 20,000 miles would still spend more. Driving 20,000 miles at 51.06 cents per mile works out to be $10,212.00. So while the average cost per mile goes down as someone drives more, the total cost still increases.
Driving fewer miles would increase the average cost per mile, but lower the total cost of ownership to a point.
Remember the “distance traveled at immediate cost” is the cost of fuel. Total cost of ownership includes things like the cost of purchasing and financing the vehicle. This is why a hybrid will perform better than a small sedan when only fuel is considered but not perform as well comparatively when we look at the total cost of ownership. All of these distances are based on how far you could travel for a single dollar.
What if You Only Paid for Fuel?
The AAA’s report assumes you financed your car and that you pay your own automobile insurance and maintenance. But what if you didn’t? What if you only had to pay for fuel?
Let’s imagine for a moment that got your 1987 Yugo for free from your maternal grandmother in Pasadena. Your rich uncle, who runs a peer-to-peer car sharing fleet in Minneapolis, put you on his insurance, and thanks to an odd air compressor accident that left you with a limp, you get free tires and oil changes at your local repair shop.
All you have to do is buy gas at the national average which was $2.32 per gallon the week of December 24, 2018, according to the U.S. Energy Information Administration. If you got about 25 miles to the gallon in your Yugo, you could travel for 9.28 cents per mile or about 10.77 miles for one dollar. For our purposes let’s call this your immediate cost.
So how far can you travel in an average car for just $1.00. The answer is about 10.77 miles when only the fuel cost is considered or about 1.7 miles when using the AAA’s total cost of ownership average.
Transportation Accounts for One-fifth of Household Spending
Given this information it is little wonder that the U.S. Environmental Protection Agency (EPA) and U.S. Department of Energy (DOE) estimated that a typical American household spends one-fifth of its total income on transportation. That makes transportation the second most expensive category after housing.