Orlando, Florida (August 30, 2023) – AAA’s Your Driving Costs (YDC) has been the trusted data source for the costs associated with owning and driving a new vehicle for more than 70 years.Based on the latest figures, the average cost of owning and operating a new car will increase significantly in 2023, with annual costs $12,182 or $1,015 monthly fee. This is a significant increase from 2022, when the average annual cost was just $10,728, or $894 per month.
“It’s important for car buyers to have a clear understanding of the costs associated with owning a new vehicle,” said Greg Brannon, director of automotive research at AAA. “Global supply chain issues and new car inventory constraints caused car prices to rise dramatically in 2022. And while the situation continues to improve, the knock-on effects are keeping prices high.”
The overall average Manufacturer’s Suggested Retail Price (MSRP) for new vehicles in the 2023 YDC study is $34,876. This is $1,575 (4.7%) more expensive than. last year. It is important to note that the Manufacturer’s Suggested Retail Price does not necessarily correspond to the consumer’s actual purchase price and may fluctuate based on demand. Additionally, sticker price increases have a direct impact on finance costs, with the average annual finance cost for this year’s vehicle being $1,253, a whopping 90% increase over last year.
Changes in the annual cost of ownership of a new car can be driven by the following factors:
- Depreciation is the difference between the car’s value when you buy it and the car’s value when you sell it. According to his YDC forecast for this year, new cars are expected to depreciate by an average of $4,538 per year over his five-year ownership period, an increase of 24% compared to 2022.
- Higher new car prices (approximately $1,600 increase) compared to used car prices, which have fallen over the past year.
- Automakers across the board have focused on producing larger, more luxurious, and more expensive cars with additional features that push prices even higher.
Compared to last year, one of the categories with the highest annual costs was fuel, but this year’s average cost per mile was down about 2 cents per mile. It’s worth noting that EV charging costs have actually increased by almost 2 cents compared to last year, from 13.9 cents per kWh to 15.8 cents per kWh. The increase is likely due to higher-than-expected inflation, the paper said. U.S. Energy Information Administration (EIA).
Considering size, fuel economy, and price, it’s no surprise that 1/2-ton pickup trucks have the highest average operating costs of all vehicle categories surveyed by YDC. Interestingly, the pickup truck market has slowed over the past 12 months as gas prices trend higher and finance costs rise. Pickup trucks are great for hauling and towing, but many buyers don’t use them for these purposes. A prospective purchaser must remember that a pickup truck’s unique features will cost him a hefty sum of more than $1 per mile.
“Pickup trucks, which were once popular, are now in slightly less demand because they have become expensive, rivaling the price of many luxury cars,” Brannon said. “As interest rates continue to rise, consumers need to factor in their monthly expenses when purchasing their next vehicle.”
AAA car buying advice
Because the purchase price is so high and affects other cost categories, it’s important to remember the following car buying tips.
- Be aware of all costs associated with ownership to negotiate the best deal.
- Let’s start early! Due to limited inventory, consumers may have fewer choices when it comes to certain vehicle models. You may have to wait for delivery, or you may have to pre-order the vehicle you want.
- BBefore discussing financing rates with a car dealer, get pre-approval from your financial institution (bank, credit union, AAA, etc.). Getting pre-approved sets a baseline for the best loan interest rate you’ll pay. Buyers can use pre-approval to negotiate whether a dealer will offer them a higher rate.
- In addition to monthly payments, create a budget and take into account the various elements of ownership before purchasing. Other factors to consider when creating your budget include insurance, gas, and regular maintenance.
- Typically, when purchasing a car, there are three things to negotiate: the car’s price, financing rate, and trade-in value. Separate each deal/negotiation from the others.
- Purchase costs: Check multiple websites, including the manufacturer’s, to see how much a vehicle sells for in your area. You could potentially save hundreds of dollars by driving away from your current location and expanding your search area.
- financing rate: The biggest factor in getting a favorable interest rate is your personal credit score. The higher your credit score, the lower your interest rate. Get pre-approved for a car loan, determine the highest interest rate you’re likely to be charged, and then ask the dealer if they can offer you a lower rate. If you can do that, you will save money.
- Trade-in value: When evaluating a trade-in, you need to determine the condition of the vehicle. Most used cars fall into the “good” or “fair” category, which is the most common. To determine value, check different websites to see the average trade-in value. *Please note that selling your vehicle individually on your own may increase the value of the vehicle you receive. However, there are safety aspects to consider, proper paperwork, sales invoices, etc. Trading in your vehicle is often easy and hassle-free.
operating cost The online calculator uses the same methodology as AAA’s annual analysis of new car ownership to provide car buyers with an interactive, personalized breakdown. Consumers can view a comprehensive cost analysis of a specific vehicle by category to determine whether the cost of ownership best fits their budget. Data is available for new and used cars (models from five years ago), and consumers can customize results based on location and other personal driving habits.
Additional AAA resources
methodology
AAA uses a proprietary methodology to calculate the cost of owning and operating a new vehicle in the United States. Data is collected from a variety of sources, including Vincentric LLC, and incorporates standardized criteria for estimating the cost of using a new vehicle for personal transportation over a five-year and 75,000-mile ownership period. Using standardized criteria ensures that AAA estimates are consistent when comparing operating costs for different types of vehicles. Actual driving costs will vary depending on driving habits, location, driving conditions and other factors.
AAA evaluated nine categories of vehicles consisting of 45 models to determine the average annual operating and ownership costs for new vehicles. AAA selects the best-selling mid-priced models and compares them across six categories: fuel, maintenance/repair/tire costs, insurance, license/registration/taxes, depreciation, and finance charges. This study assumes a five-year ownership period in which the vehicle is driven 15,000 miles per year (or 75,000 total miles).
About AAA
Founded in 1902 by automobile enthusiasts who wanted to improve America’s roads and advocate for safe travel, AAA has transformed into one of North America’s largest membership organizations. Currently, AAA provides roadside assistance, travel, discounts, finance and insurance services to enhance the life journeys of its 63 million members across North America, including more than 56 million in the United States. I am. For more information on everything AAA has to offer or to become a member, please visit: AAA.com.