Canadians poured an average of $8,060 into their vehicles in 1999, an increase of $500 over last year -- and that's before gas prices shot up.

The Canadian Automobile Association, which prepared the study, calculated the price of driving an average of 18,000 kilometres a year based on operating costs -- things such as gas and repair costs -- and ownership costs, including depreciation and insurance.

This year's annual study ended in November 1999, a few months before the price of gasoline rose to its highest level in nine years. While prices have fallen, gas is still, on average, seven cents more expensive than it was last fall before the study was finished.

The study found that the most expensive places to operate a car in Canada are Newfoundland and Quebec, while the cheapest driving is in Manitoba and Alberta.

While gas took its fair share from drivers' wallets, the biggest expense of owning a car was depreciation, particularly in the car's first year. Depending on the model, a car depreciates by 20 to 30 per cent as soon as it's driven off the dealer's lot.

That's why drivers looking for a new vehicle should consider buying a year-old car, says Brian Hunt, president of the CAA. The mileage is still low, most of the warranty is valid, and the original driver takes the hit for the depreciation.

The first-year depreciation is also a big reason why car leasing has become so popular, Hunt says. If drivers choose to buy out a car they've been driving a while, they can reduce the "shock" of the initial sticker price.

If you still want a brand new car, there are a few ways to reduce your costs:

  • Buy the most efficient car you can afford. Your fuel costs will fall along with your insurance.
  • Forget about an SUV. They're sporty but they guzzle gas.
  • Shop around for the best financing. Dealers are still offering great incentives, even as interest rates rise at the banks.
  • Consider a slightly-used luxury car. They offer great re-sale value.
  • Keep your car well-maintained and drive in safe, fuel-efficient manner
  • More gas conservation tips

To calculate your own vehicle costs, download the brochure from the CAA.