Sports Utility Vehicles, have become increasingly popular in recent years – 45% of global car sales, were SUVs (according to iea.org).
They are known for their spacious interiors, high driving positions, and robust performance, making them an attractive choice for many car buyers.
However, owning an SUV also comes with a cost beyond the initial purchase price. This cost is known as the Average Cost of Ownership (ACO).
The ACO of a sports Utility Vehicle includes the expenses that an owner will incur over the lifespan of the vehicle. This cost encompasses not just the purchase price of the SUV but also the running costs, maintenance, repairs, and depreciation. Thus, it is essential to consider the ACO when making a purchase decision.
Elements that make up the ACO of an SUV
Purchase Price: The purchase price is the most significant expense when buying an SUV. SUVs are generally more expensive than other types of vehicles. The cost can range from around $20,000 for a small SUV to upwards of $100,000 for a luxury model.
Fuel Costs: SUVs tend to consume more fuel than other types of vehicles, primarily due to their size and weight. The average fuel economy for an SUV is around 20 miles per gallon, which can cost the owner around $2,000 to $3,000 per year.
Insurance: Insurance costs for the average small to midsize SUVs can be lower than that of some family sedans. The average cost of insurance for an SUV is around $1,900 to $2,900 per year (depending on size and model year).
Maintenance and Repairs: SUVs require regular maintenance and repairs to keep them running smoothly. The cost of maintenance and repairs can vary greatly depending on the make and model of the SUV. According to Kelley Blue Book, the average annual maintenance cost for an SUV is around $1,200 (compact SUV/crossover ).
Depreciation: SUVs tend to depreciate faster than other types of vehicles due to their higher initial cost and fuel consumption. The average depreciation rate for an SUV is around 15% per year.
Example ACO of a $30,000 SUV
Based on the above elements, we can estimate the ACO of an SUV. For instance, let us consider a mid-sized SUV that costs $30,000. The annual fuel cost will be around $2,500, insurance will cost around $1,200, maintenance and repairs around $1,200, and depreciation will be around $4,500. Thus, the ACO of the SUV will be around $9,400 per year.
In conclusion, owning an SUV can be expensive. The ACO of an SUV includes not just the purchase price but also the fuel costs, insurance, maintenance, repairs, and depreciation.
It is essential to consider the ACO when making a purchase decision and factor in the cost of ownership over the lifespan of the vehicle. By doing so, car buyers can make an informed decision and avoid any surprises in the future.