Study: Annual Cost of New Car Ownership Surges Past $10K

DENVER (Aug. 11, 2022) - It's not just "sticker" shock: Amid historic inflation, new car buyers are paying more for all things automotive, including fuel, maintenance, and insurance. That's the latest from AAA's Your Driving Costs analysis, which found the average annual cost to own and operate a new vehicle in 2022 is up more than 10% over last year. 

According to this year's report: 

• The average yearly cost to own and operate a new vehicle in 2022 is $10,728, or $894 a month.

• That's an 11% increase from 2021, when the average yearly cost was $9,666 or $805.50 per month.

• In Colorado , the average yearly cost to own and operate a new vehicle in 2022 is $11,451 - 7% higher than the national average. 

• Not surprisingly, fuel prices are the most significant factor driving up this year's average annual price tag. 

"High gas prices aren't just changing driving habits - they're also changing the way Americans think about cars," said Skyler McKinley, regional director of public affairs for AAA. "In fact, AAA research shows that one of the main reasons more folks want to go electric is to save money on gas."

In the most recent analysis, AAA evaluated nine categories of vehicles - consisting of 45 models - to determine a new vehicle's average annual operating and ownership costs. AAA selects top-selling, mid-priced models and compares them across six categories: fuel, maintenance/repair/tire costs, insurance, license/registration/taxes, depreciation, and finance charges. The study assumes a five-year ownership period, with the vehicle being driven 15,000 miles/annually (or a total of 75,000 miles).

Calculating Fuel Costs

Gas prices saw a dramatic climb in the first half of 2022, raising the cost of vehicle ownership, since the Your Driving Costs evaluation was completed. For this year's study, fuel costs were projected based on a weighted average of the first five months of 2022. During that time, fuel prices averaged 17.99 cents per mile or $3.999 per gallon.

Electric vs. Gas-Powered Vehicles

An electric vehicle owner will spend about 4.0 cents per mile to charge their vehicle at home, while the owner of a gas-powered vehicle will spend an average of 18.4 cents per mile to gas up. Assuming both drive 15,000 miles/year, it would cost approximately $2,700/year to fuel the gas-powered vehicle and $600/year to charge the electric vehicle. That amounts to a difference of $2,100 annually in favor of electric vehicles. 

Beyond fuel savings, electric vehicles have the lowest maintenance, repair, and tire costs. That's because gas-powered vehicles require additional maintenance such as oil changes, air filter replacements and inspection of mechanical components not present in electric vehicles. Additionally, electric vehicles have the lowest fees due to federal and state rebates offered to buyers of new electric vehicles as a purchase incentive.

AAA Launches New Online Calculator

New this year, AAA launched an online Your Driving Costs Calculator . This tool enables consumers to determine the overall driving costs of a specific vehicle. When visiting the site, consumers can select their desired state, annual mileage and driving ratio that represents their normal driving habits, and vehicle year/make/model/trim.

This online tool employs the same methodology as AAA's annual analysis of new car ownership. Data is available for new and used vehicles (five model years back), and consumers may customize the results based on location, fuel price, and other personal driving tendencies.

AAA recommends car buyers follow these steps before purchasing: 

• Start early! Due to limited inventory, consumers may have fewer choices regarding a specific vehicle model. They may have to wait for delivery or even pre-order the vehicle of their choice.

·• Obtain pre-approval from their financial institution (e.g., Bank, Credit Union, AAA, etc.) before discussing finance rates with the car dealer. By getting pre-approval, they will have a threshold of the best lending rate they'll pay. Buyers can use their pre-approval to negotiate if the dealer offers a higher rate.

• Create a budget and factor in the different elements of ownership before purchase - not just monthly payments. Other factors to consider when making the budget include insurance, gas, routine maintenance, etc.

• Call your insurance agent to compare potential rates across your top choices and your current vehicle.

• Typically, three negotiations occur when purchasing a vehicle - the cost of the car, the finance rate, and the trade-in value. Keep each transaction/negotiation separate from the other.

Other resources consumers can use while car shopping:

• AAA Car Guide - easy-to-understand resource that can help improve consumers' decision-making when it comes to car buying.

• AAA's Car Buying Program - helps consumers shop for new or used vehicles and compare vehicle pricing online.