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The Lexus IS 250’s high resale value helps make it one of the least expensive luxury vehicles.
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updated 7/15/2008 3:54:23 PM ET 2008-07-15T19:54:23

The most important dollar figure for calculating what it costs to own and maintain a car is $140.

That’s about how much a barrel of oil currently costs.

This historic high is almost single-handedly responsible for driving up the cost of owning and maintaining your automobile. “The overall cost of ownership was likely down if you look at non-gas factors,” says Michael Calkins, manager of approved auto repair for AAA, based in Heathrow, Fl. “But the cost of fuel overwhelms everything else.”

A new car driven 15,000 miles annually will likely cost owners $8,121 per year, up from $7,823 in 2007, according to the 2008 edition of AAA’s annual study that assesses ownership costs. That’s a 1.9-cent increase per mile to a total of 54.1 cents per mile.

The study, called “Your Driving Costs,” calculated ownership costs for four-wheel-drive SUVs separately, and they drain significantly more funds than the average car: a projected $10,448 per year, up from $9,997 in 2007.

The size of a car has a big impact on how much it costs to finance, own and maintain. And generally speaking, the smaller the car is, the less it will cost owners.

For small sedans, the average ownership cost in 2008 is expected to be $6,320 — up from $6, 217 in 2007. Medium sedans should increase to $8,273 from $7,871, according to AAA.

For large sedans, the cost is much higher: $9,769 in 2008, up from $9,380 in 2007. For minivans, costs should increase to $8,644 from $8,639, which is lower than large sedans and SUVs.

Those numbers suggest that value-oriented drivers shopping for a large vehicle that accommodates five or more occupants would be better off choosing a minivan over a large sedan or SUV when it comes to ownership costs.

Fuel expenses are up across the board, as expected. The most dramatic hikes are for less efficient larger vehicles.

Four-wheel-drive SUVs still have the highest fuel expense, costing owners a projected 17.05 cents per mile in 2008, up from 12.6 cents in 2007, according to AAA data. Minivans do slightly better on fuel: 14.01 cents per mile this year, versus 10.6 cents last year.

On average, owners of small sedans like the Volvo S40, for instance, will pay the least in fuel expenses: 9.39 cents per mile this year, up from 7.4 cents in 2007. Medium sedans will cost owners 12.34 cents per mile for fuel, up from 9.4 cents; and large sedans 13.38 cents, up from 10 cents.

AAA’s fuel costs for 2007 were based on $2.25 per gallon gas at the end of 2006, while 2008’s were based on $2.94 per gallon at the end of 2007 — a figure that already seems quaint.

“This gas-price-driven increase in expense doesn’t feel like a simple economic cycle to me,” says Charles Ballard, a professor of economics at Michigan State University in East Lansing, Mich. “Gas at $4 per gallon is a reality during the summer driving season this year, and if this maintains itself, people will get the message that we’re in a new regime.”

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New cars can go longer than 3,000 miles between oil changes.

Ballard and other industry analysts believe high gas prices could be here to stay. If so, the public will likely downsize to smaller vehicles, own fewer vehicles overall and drive fewer miles, experts say.

Higher fuel costs have already made an impact on Ballard’s next car purchase. “I’m going to get a passenger car,” he says. “I would have gotten an SUV, but I’m looking at a Chevy Impala. It’s not super fuel-efficient, but it has a feature that allows you to take down the back seat and haul stuff that way.”

The U.S. Department of Transportation reports that Americans drove 3.6 percent fewer miles last year than the year before — a total of 3.003 trillion miles in 2007 compared to 3.014 trillion miles in 2006, according to preliminary measurements.

That would make 2007 one of the few years — if not the only year — in U.S. history during which total traffic volume decreased.

“It’s undeniable that consumption patterns are changing and are in transition right now,” says Doug Hecox, a spokesman for the Federal Highway Administration in Washington.

But he stopped short of directly blaming higher gas prices for the reduction in miles driven. “We can’t attribute this anomaly to one variable. It could be the weather that drove people away from driving,” Hecox says.

Besides downsizing and driving less, there are other ways to curtail costs, some of which have little to do with prices at the pump.

Simply lengthening scheduled maintenance intervals can save money. Today’s vehicles can go longer between routine services, such as oil changes.

“There are better quality engines being manufactured with a more precise tolerance and improved lubricants, and the combination of these things allows you to expand certain maintenance intervals,” says Jim Cain, a spokesman for Ford in Dearborn, Mich.

General Motors now includes an “oil life monitoring system” on its vehicles; it’s currently on about 18 million of them. The system continuously monitors engine-operating conditions to determine when to change oil. Intervals usually range between 5,000 and 12,000 miles, depending on driving conditions and climate.

The traditional 3,000-mile oil-change interval espoused for decades is becoming obsolete. And at around $50 a pop, fewer oil changes each year means more money in the bank — or more money for gas.

Being smart about where your vehicle is serviced can also keep costs down.

“Independent repair shops are less expensive than dealers, so that’s something to consider,” says AAA’s Calkins. “You don’t have to have your car maintained at a dealer to maintain your warranty.”

Drivers should also be vigilant of unnecessary or premature maintenance. “You don’t have to change your wiper blades if they’re still successfully clearing the window,” Calkins says.

Online resources such as the new Web site RepairPal.com can help in assessing maintenance and service costs and in finding reputable shops with competitive rates.

AAA projects that maintenance costs for the three sedan classes (small, medium and large) will drop to 4.57 cents per mile this year, down from 4.9 cents per mile in 2007.

As fuel costs drive up ownership costs overall, non-fuel-related expenses are actually holding steady.

“In general, except for fuel and oil, automotive costs have stayed pretty competitive for an extended period of time,” says Steve Polzine, a director at the Center for Urban Transportation Research in Tampa, Fl.

Experts attribute this to increased competition among automakers, which keeps vehicle pricing and financing terms in check.

Full coverage auto insurance for sedans is projected to drop to $943 in 2008 from $985 in 2007, according to AAA. And annual depreciation expenses are expected to decline from $3,392 in 2007 to $3,321 in 2008.

“Cars are increasingly built better, so the depreciation losses are improving,” says AAA’s Calkins. “And insurance costs are down because cars are being built with improved theft protection.”

Two areas that AAA expects will experience slight increases are license, registration and taxes — rising to $554 per year from $538 in 2007— and finance charges — up to $758 per year from $733 in 2007.

“Rates are low right now, so if you can come down a point or two and have three or four years left on your loan, it might make sense to refinance,” Calkins says. “Car loans don’t have all the setup costs of a home loan, so any rate drop you can get is worth going for.”

For more tips on how to lower ownership costs, see the “slide show” link above.

© 2008 ForbesAutos.com

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