Adjustment of Costs to Other Vehicles and Localities

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.