Many would-be car buyers put their plans on hold for several years as the central San Joaquin Valley's economy struggled to rebound from recession. Now, as the region heads toward improvement, a growing number of people are reviving their intentions to replace their aging vehicles with something newer and shinier.
But as they carefully scrutinize the stickers on the windshield to compare prices and weigh interest rates on auto loans, experts say many car shoppers tend to overlook the more subtle long-term costs of vehicle ownership — things like fuel costs, insurance, maintenance and repairs and, potentially the biggest cost of all, depreciation over the life of the vehicle.
"I don't get a lot of people asking me about ownership costs," said Daniel Del Campo, an independent car-buying consultant in Fresno. "When it's a brand-new car, a lot of people don't think about costs like maintenance because they won't have to worry about it for a couple of years."
"But it's not something people think of as much as they should, about budgeting to cover future expenses," he added.
The U.S. Bureau of Labor Statistics reported that in 2012, the most recent year for which details are available, consumer spending on transportation by the average family in the western U.S. was $9,367 - almost $1,000 more than 2011, and the highest level since 2007.
The net outlay of car payments amounted to $3,115, or only about one-third of total transportation spending in 2012. The second largest chunk of the family transportation budget, about $2,800, went for gasoline and motor oil. Vehicle insurance came in third, at almost $1,100 for the year. Maintenance and repairs rounded out expenses at an average of $982 a year.
Beyond those out-of-pocket costs, depreciation - the difference between the car's value before you drive it off the lot and its resale or trade-in value years down the road - represents a hidden expense of ownership that must be factored in.
Some vehicles typically hold their value better than others as they age. But on average, according to Consumer Reports, depreciation accounts for nearly 60% of the cost of ownership for a 1-year-old car. Because a car loses value more slowly as it ages, that share falls to 48% by the time a car is 5 years old.
After you get past the dealer's asking price on the window, the most obvious out-of-pocket cost is going to be fuel. Gas prices in the central San Joaquin Valley are currently hovering near or above $4 a gallon.
If you own a car for five years and drive an average of 15,000 miles a year, a difference of a few miles per gallon between two otherwise similar vehicles can add up to substantial differences by the time a consumer starts browsing the 2019 models. Those differences will only be magnified if - or more likely, when - fuel prices go up over time.
Thanks to fuel efficiency ratings posted on the price stickers and available online, it's a reasonably simple matter for buyers to compare what it might cost to gas up different models. If you can estimate how many miles you drive in a day, week or month, and whether those miles are on highways or city streets, a little arithmetic can help you determine how much you're likely to spend over the course of a year and, subsequently, for however long you plan to hang on to the car.
If you're mathematically challenged, however, there are tools to help. The American Automobile Association offers a "Your Driving Costs" brochure, for example, that provides an average cost per mile for different categories of vehicles. Automotive research firms Edmunds.com, Kelley Blue Book and IntelliChoice have online calculators available that consider not only fuel efficiency, but also the repair and reliability history of different makes and models, insurance costs and depreciation.
If you drive in California, you're legally required to have insurance, and it doesn't come cheap. While factors like driving record, where you live, how much you drive and even age play a role in determining costs, the type of car one buys is an important consideration when insurers calculate your premium.
In a recent analysis of car insurance costs in California, experts at WalletHub.com reported that sports cars are the most expensive vehicles to insure, with an average premium of about $1,840 a year. Trucks are the next most expensive, followed by sedans and then crossovers/SUVs.
Just because a car has a lower price doesn't necessarily mean it's going to be cheaper to insure. "Insurance premiums for cars in the same price range can differ by as much as 26% and the variation actually increases more for expensive vehicles," according to the WalletHub report. "Only about 25% of the variation in insurance premiums across car types can be attributed to difference in car price."
The WalletHub report also notes that the average insurance premium in Fresno County was about $1,275 a year - the eighth highest in the state. Los Angeles County had the highest cost, at almost $1,600 a year, while the lowest average premiums were in San Luis Obispo County, at $1,014.
Experts advise that buyers check with their insurance agent to get quotes as they narrow down their vehicle options so they can factor that into their cost-of-ownership estimates.
CarMD, which makes handheld devices that plug into a car's electronic system to diagnose problems, reported the average cost for repairs associated with a "check engine" light cost in the U.S. rose by 6.7% in 2013, climbing to almost $400. That came on the heels of a 10% jump between 2011 and 2012, and was the highest repair average since 2007.
Part of that rising repair cost could be the result of car owners hanging on to vehicles well beyond their prime and putting off buying something new until after the economy improves, said Marty Kamimoto, who has taught automotive technology classes at Fresno City College for 18 years.
But he added that when times get tight, some owners put regular maintenance on the back burner - trading a short-term savings for a potential disaster down the road if the vehicle has a serious breakdown.
"If you follow the manufacturer's maintenance schedule, that car will last until you make that last car payment and then on after that," Kamimoto said. "If you don't follow the schedule, you're headed down the path of disaster."
Kamimoto and Del Campo said more carmakers are making it easier to stay on those service schedules by offering two years or more of basic scheduled maintenance, such as oil changes, tire rotations, checking fluids, etc., for up to two years or more.
"The incentive from the company is, 'If you buy my car, I'll give you two years of maintenance free for that period of time,' " Kamimoto said.
Del Campo added that manufacturers are offering longer warranties - up to 10 years or 100,000 miles in some instances - as a security blanket for buyers. But for those warranties to remain in effect, an owner has to keep up with the basic maintenance.
And as people hang on to their cars longer, "eventually a warranty will expire and you'll have to cover that cost," he said.
One factor for customers to consider for maintenance costs is whether they expect to buy or lease a car. Planning for long-term maintenance costs won't matter, for example, if you're going to lease a car or trade in a purchase in a couple of years.
Those who expect to drive their car until the wheels fall off, Del Campo said, may want to consider an extended vehicle warranty beyond the manufacturer's standard warranty. "I think they're a good idea; I buy one for my vehicles, and I've had to use it," he said.
There's an array of third-party insurers that offer warranty policies, but Del Campo said customers are well-advised to shop around and do their homework.
"Some warranty companies are reputable, and others aren't," he said. "If you buy from a company that's not reputable, you may have a problem when it's time to make a claim."
Less problematic are factory service contracts offered by the car manufacturers themselves, Del Campo said, and many credit unions offer mechanical breakdown insurance for their members.
"But if you don't plan on keeping the car for more than two or three years, you may want to pass," he said.
Kamimoto said that while some ambitious car owners may chomp at the bit to tackle some of their own basic service, rapidly evolving automotive technology means that the days of the shade-tree mechanic are waning.
"The cars are getting very advanced," he said. "There is some stuff that the do-it-yourselfer can do, but that do-it-yourselfer has to have some kind of training. It takes more than just mechanical aptitude; you have to be aware of what you're doing."
Even something that 20 years ago would have been as simple as changing the oil or replacing brake pads can represent unknown hazards. "On some hybrids, if you don't know the proper steps, they can inadvertently start by themselves, and if you've got the drain plug out, it can be very serious," Kamimoto said.
And on some vehicles, removing a worn brake pad without doing things in the right sequence can erroneously signal a problem to the car's computer, triggering a self-diagnostic test that applies the brakes and can damage the system.
With the more demanding specifications of newer cars, "you need to know what oil to use and use a good-quality filter," Kamimoto said. "You don't just go down to the store to buy cheap oil for $1 a quart or the cheapest filter that's on sale."
Just as customers can comparison-shop for the best price on a car, the lowest fuel prices and the best deal on insurance premiums, Kamimoto said it's important for car owners to shop around for the best prices among certified mechanics, not only for major problems, but for routine maintenance as well.
In it for the long haul
Several organizations have resources available online to help would-be car buyers determine their long-term costs of vehicle ownership beyond the sticker price of the car.
AAA: Your Driving Costs brochure, http://publicaffairsresources.aaa.biz/wp-content/ uploads/2014/05/Your-Driving-Costs-2014.pdf
Edmunds.com: True Cost to Own calculator, http://www.edmunds.com/tco.html
Kelley Blue Book: 5-year Cost to Own calculator, http://www.kbb.com/new-cars/ total-cost-of-ownership/
IntelliChoice: Cost of ownership calculator, http://www.intellichoice.com/
The reporter can be reached at (559) 441-6319, email@example.com or @TimSheehanNews on Twitter.