Cost analysis of owning a new car
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Analysing the cost of owning a new car

February 2019

My Honda Civic 1.8L auto was bought new in 2008 and was sold exactly 10 years later. All the costs of operating and maintaining the car have been faithfully recorded, so here is a snapshot of the real costs of owning a car from new.

This is an update of an article which appeared April 2016

Chart of costs


The chart shows my costs in NZ dollars and the relative percentage for each cost element for the whole 10 year period. All costs shown include GST.

Explaining the segments

Cost Item Notes
Depreciation Depreciation is the largest cost of ownership. The car was bought for $30,000 and was sold for $6000. Although not written down anywhere, Honda dealerships may promote their vehicles with the implication of reduced depreciation in comparison with other makes. I cannot say whether true in practice, one way or the other.
Petrol The car travelled 78,595km in 10 years. Cost of a litre of petrol varied over that time, but the Civic averaged 5.78km for each dollar of petrol. Statistics show that the average price per litre at the pump was $2.04 over that period, so 6663 litres of 91 octane was poured in, making the economy 8.477 litres/100km. Around 65% of the distance travelled was urban, so I rate economy as reasonable.
Insurance Next largest cost item is insurance. Originally we were with AMI, then switched to ASB in 2014. Comprehensive insurance has averaged $434 per year, and no claims have been made.
Servicing The car was serviced annually by a Honda NZ dealership. At $334 per year on average, it was starting to rise. Honda mechanics are not quite charged out at the same hourly rate as my dentist, but the gap is closing.
Parking This will be a huge variable for most people who commute into work in a city. My costs of $2,686 are quite low overall, because I commuted and paid $180 per month for parking only for one year out of the ten. The remainder of time was itinerant parking only. For some people, parking costs will be almost nothing, but in large cities, long term parking can be over $200 per month. If you paid that for 10 years, your parking costs would be $24,000. Ouch!
Minor costs Five tyres were bought over the period. One full set of four at the 29,000km mark and another one after I ran into a low kerb and Beaurepaires said the tyre couldn't be (beau)repaired. One battery, a small panelbeating job on the rear bumper, and of course, the WOF make up the rest.

The numbers are not in favour of new car ownership from a financial viewpoint. I find it hard to understand how some households can afford two or even three vehicles. My costs as above are relatively low. The Civic is a small sedan, is fuel efficient and my annual mileage is well below average. The other factor that I conveniently ignored is inflation, which makes money buy less now than the same amount did 10 years ago. Fortunately, inflation has been fairly low in the last 10 years so the sums won't change much. Then, if I hadn't bought a car at all, I would not have spent the $50,367 and would have around $10,000 more to my name after investing the original $30,000 purchase price at 3.5% p.a compounding. The least worse option if you must have one, is to buy an older vehicle in good condition, which has lower capital cost and which suffers much lower depreciation. The maintenance costs are likely to be higher than for a new car, but even with that, you will be better off financially.

Vehicle usage factor

As a parting thought, how much time did I spend actually driving the car, compared to the time it was parked? This requires making some estimates, but I think the figures are in the ball park. I did three types of travel. First is long distance; going on holiday, second is mixed urban and regional travel up to 100km from home and finally the urban travel such as shopping and commuting. This is how it breaks down:

Yes, 20km/hr is my average speed around inner Wellington. From home to the CBD is 5.5km; a trip which takes 20 minutes. That is only 16.5km/hr but some time is to local suburbs, for which things are a bit faster -not so many traffic lights, so 20km/hr average is reasonable.

So, how many hours are there in 10 years. To save you the headache, it is 87,600 hours. I spent 2915 hours using the car, which is 3.3% of the time. Alternatively, the car spent 96.7% of its time parked, mostly in my garage, not doing anything. Not a great usage factor in any language and which makes the costs even more prominent.

A better way?

It is all about convenience, of course. To give up car ownership means you have to plan ahead to use public transport. Travel could be less comfortable if the weather is inclement. You would be better off hiring a car for the occasional holiday away from home. Without a car, it becomes hard to pop down to for a picnic on the beach on a whim and tasks like grocery shopping or going to the home improvement centre, or just taking a load of garden clippings to the landfill become problematical. We kiwis appear to like convenience, more so than most other nations if you look at the rate of car ownership per capita population. These figures suggest to me that urban planners need to start discouraging car ownership right away. Already, streets are clogged with parked cars; there are often several cars associated with each dwelling. For urban centres, perhaps an expanded Uber transport model could be useful, with multiple companies offering fleets of cars, to be called up on demand. Further down the track, these might become self drive. Alternatively, provide multiple city and suburban depots with several vehicles available which would allow any licenced person to access a car by app, rather like the Lime scooter model.