The cost of a year of depreciation over the past 12 months amounted to nearly a third of total cost of ownership, according to a new study.
 - Photo via JJ Kane.

The cost of a year of depreciation over the past 12 months amounted to nearly a third of total cost of ownership, according to a new study.

Photo via JJ Kane.

Vehicle depreciation accounted for 32.9% of the total cost of ownership over the past 12 months, which continues a three-year trend of declining depreciation costs, according to a new study from Motus.

The findings came in the 2019 Cost of Vehicle Ownership Trend Report, which showed how new vehicle prices, residual values, and depreciation impacted the TCO over that time period.

"This is a slight year-over-year decrease and establishes a three-year trend of gradual decreases in the rate of depreciation, representing an eight percent improvement since 2016," said Ken Robinson, market research analyst for Motus. "With this in mind, Motus predicts that depreciation will decrease between half of a percent and one percent over the next 12 months."

For the next 12 months, the overall cost to own and operate a vehicle should decrease from 0.6% to 1%, according to Motus.

New-vehicle prices have been increasing steadily in recent years. In 2018, the average price for a new vehicle in the U.S. reached $36,000, which was about 3% higher than the average sale price in 2017.

The average sale price for a used vehicle to consumers increased 2.9% to $16,738. Vehicle owners should expect a slight decrease in residual value over the next 12 months of between 0.5% to 1%, according to the company.

The study also looked at vehicle purchasing trends, which have been shifting toward SUVs. About 48% of all consumers who bought new vehicles in 2018 purchased an SUV.

In 2019, consumers can expect about a 2% increase in new vehicle prices due to increased production costs for manufacturers to add improvements such as more fuel-efficient engines and transmissions, as well as lighterweight body materials. The price of new vehicles would increase from $4,000 to $6,000 if the Trump administration enacts tariffs on auto parts.

Motus offers a vehicle management and reimbursement platform.

Originally posted on Automotive Fleet

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