New-vehicle prices, residual values and depreciation directly affect the costs of owning and operating vehicles, says a new study.
Depreciation accounted for 32.9% of those owning and operating costs over the past 12 months, according to the 2019 Cost of Vehicle Ownership Trend Report by Motus. Good news for drivers is a slowing down of depreciation rates.
“This is a slight year-over-year decrease and establishes a three-year trend of gradual decreases in the rate of depreciation, representing an 8% improvement since 2016,” says Ken Robinson, a Motus market research analyst.
Accordingly, Motus predicts depreciation will decrease between 0.5% and 1% over the next 12 months. Motus specializes in mileage reimbursement and driver-management technologies for businesses with mobile workers and fleets.
Among market trends influencing vehicle-ownership expenses is consumer preference, a significant price factor.
Prices have increased steadily in recent years. In 2018, the average price for new vehicles in the U.S. was around $36,000, about 3% higher than the average in 2017.
“Costs and spending trends affect the way people spend their money, which in turn influences how businesses behave,” says Motus CEO Craig Powell. “For example, vehicle depreciation can have a big impact on employees who drive for work every day, as every mile driven affects the residual value of a vehicle.”
Powell adds: “It’s important for businesses to account for fluctuations in trends like these because they have a direct impact on the costs of owning and operating a vehicle.”
Additional report findings:
- The demand for SUVs has never been higher. Forty-eight percent of people who bought new vehicles in 2018 chose SUVs for their next vehicle.
- In 2018, the average sale price for a used vehicle increased about 2.9% to $16,738. A stronger demand for small and midsize cars in the pre-owned market influenced the price increase.
- Consumers this year should expect new car prices to increase about 2%, mainly the result of increased production costs for vehicle improvements, including more fuel-efficient engines and lighter-weight body materials.
- Potential U.S. enacts tariffs on auto parts could boost prices of all new vehicles. Analysts estimate it would add between $4,000-$6,000 to the price of new vehicles.
- Vehicle owners should expect a slight decrease in residual vehicle values between 0.5 percent and 1% over the next 12 months.
- The overall cost to own and operate a vehicle should decrease from 0.6 percent to one percent over the next 12 months.