Annual cost of new car ownership crosses $10K mark

CLEVELAND — For more than 70 years, AAA's Your Driving Costs has provided members, consumers and the media with information on the average costs of owning and operating a new automobile. According to the latest research from AAA, the average yearly cost to own and operate a new vehicle in 2022 is $10,728, or $894 per month. This is a considerable increase from 2021, when the average yearly cost was $9,666 or $805.50 per month. Fuel prices are the most significant factor pushing this year's average annual price tag. "Just about everything costs more now and consumers are paying attention to every dollar they spend, especially on major purchases like a new vehicle," said Mike Hoshaw, vice president of automotive services, AAA East Central. "Our research shows higher gas prices are causing more people to investigate the true cost of owning a vehicle beyond just the monthly payment." This year, AAA launched an online Your Driving Costs calculator to provide a more interactive and personalized breakdown for car shoppers. This online tool employs the same methodology as AAA's annual analysis of new car ownership. It allows users to view comprehensive cost analyses of a specific vehicle by category to determine ownership costs that best align with their budget. Data is available for vehicles that are five years old or newer, and consumers may customize the results based on location and other personal driving habits. In the most recent Your Driving Costs analysis, AAA evaluated nine categories of vehicles — consisting of 45 models — to determine a new vehicle's average annual operating and ownership costs. AAA selected top-selling, mid-priced models and compared them across six categories: fuel, maintenance/repair/tire costs, insurance, license/registration/taxes, depreciation, and finance charges. The study assumed a five-year ownership period, with the vehicle being driven 15,000 miles/annually (or a total of 75,000 miles). 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 $3.99.9 per gallon. Gas prices have seen a dramatic climb since early March, and, as a result, the cost of vehicle ownership has increased accordingly since the Your Driving Costs evaluation was completed. Because of the high variability of fuel costs, consumers are considering alternative ways to budget for the cost of vehicle ownership. In a recent AAA consumer survey, one-quarter of Americans said they were exploring electric vehicles as an option for their next car purchase. This year's Your Driving Costs analysis reveals that electric vehicles have the second lowest annual ownership costs behind small sedans. 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. AAA urges car buyers to know all the expenses associated with ownership to negotiate the best deal for their budget and recommends consumers 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. 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. Calculate annual driving costs through the new AAA Your Driving Cost calculator. Consumers can use other resources while car shopping, including the AAA Car Guide and AAA's car buying program.