What is the Right Amount to Pay for Maintenance?

How much is too much to spend on repairs? …or on maintenance? It's a question we've all had to ask yourself at one point or another. Perhaps it would help to have a basic sense of what auto maintenance typically costs over time.

Average Cost of Annual Maintenance

The average North American household owns 1.9 vehicles and spends around 1.5 percent of its annual income on auto repairs. In 2011, the standard family unit earned $54,453, which means they laid out around $817 annually on repairs.  This is an average of all cars new and old.  See Figure 1 for an annual breakdown of what you should be budgeting for maintenance as your vehicle gets older.

Is that a lot? It depends on how you look at it. Like all complex machines, cars and their components have projected operational life spans. 

Figure 1- Average maintenance by Vehicle age

Manufacturers anticipate that some components will fail often and that you'll replace them as part of routine maintenance, while others will last longer. The long-life components will generally be more costly to replace, but even those might not be so bad if you think of the cost spread over the lifetime of your car -- spending $500 to $800 to replace an alternator stings a little less if it's already kept you humming along for 120,000 to 160,000 kilometres.

If you own your car long enough, you'll have to replace or rebuild an awful lot of it, but that doesn't mean it's necessarily a bad idea. After all, new cars are expensive. They also depreciate an average of 45 percent over the first three years of ownership -- between 48.3 and 79.3 percent over the first five years.

Vehicles Last Longer Today

The average life of a vehicle has increased from 150,000 Kilometres in the 1970’s to over 325,000 Kilometres today.  Furthermore, the number of times you need to maintain a vehicle has decreased dramatically (See Figure 2).  For instance, exhaust, tires, brakes and shocks all last longer.  But that does not reduce the importance of doing preventative maintenance.  Maintaining your vehicle as recommended by your vehicle manufacturer will ensure you get the longest life from your vehicle.  AND will keep repairs to a minimum over the lifetime of your vehicle.

Figure 2: Service Incidence

In other words, for the cost of owning a new car for one year, you could maintain a paid-off car for five years, keeping it well maintained, and still have money left over for gas.  Your savings would be roughly $5000 per year.

The Value of Preventative Maintenance

Preventative maintenance and replacing worn parts when they are end of life will reduce your overall cost on maintaining your vehicle.  For instance, replacing worn shocks at the recommended 80,000 KMs will avoid costing damage to other suspension and steering
components.  Furthermore it will add many more years to the life of your tires.  After all that is the function of shock... to protect your car. 

Figure 3*: Service Frequency & Cost

Maintaining your vehicle will not only avoid costly repairs later but also contribute to better gas mileage and keep your vehicle safe.  A regular preventative maintenance schedule includes oil changes, other fluid changes including transmission, power steering, coolant and brake fluid, brake pads and rotors, shocks and struts, and a regular tune-up and spark plug change. Figure 3*, is a list of some key areas requiring preventative maintenance and a general ballpark of the costs involved and when you should do them. Consult your owner's manual for information about when to replace specific fluids and components for your vehicle. 

 * This is a general rule of thumb; actual maintenance frequency and cost will vary by make/model, usage, climate, road conditions, etc.

Budgeting for Maintenance & Repair

Not performing the recommended maintenance in a timely fashion could result in a very high repair bill when the competent fails.  For instance, not replacing a timing belt could cause catastrophic damage to the internal components of an engine when it fails resulting in a very expensive engine replacement.  Consider the $300-600 cost of replacing a timing belt the insurance to avoid a $3000 (or more) engine replacement.

Figure 4: Potential Repairs

The bottom-line is that preventative maintenance will help you avoid very costly repairs later as well improve the performance of your vehicle thus increasing gas mileage and the safety of your vehicle  Figure 4 demonstrates some of these trade-offs. 

 

Of course, there are other things you should think about. If your older car is consistently unreliable and causes you to miss work, show up late, or repeatedly leaves you stranded along dark highways, it might be time for a new one. Also, there are some problems that are incredibly difficult and expensive to fix, pushing the cost of the old car above the cost of a new one. If your car has had a number of major issues, and your mechanic sees more coming down the pike, it might be time to start thinking about a new ride. But of course if you have been maintaining your vehicle all along then this wouldn’t be happening, right?

There are also people who like getting a new car, and don't mind that they are spending more to do so.