The average cost of new vehicle ownership is approaching $10,000 a year amid a shortage of cars and trucks that has driven up prices, according to a new study.
The rising cost of vehicles stems from multiple factors, including a global semiconductor chip shortage that has limited car production and led to price hikes.
The average annual cost for owning a new vehicle is now $9,666, or $805.50 per month, according to the 2021 Your Driving Cost study released by AAA.
The study, conducted from May 2020 to May 2021, reviewed costs for the five top-selling vehicles in nine categories. These vehicles were then assessed across six categories of expenses: fuel, maintenance/repair/tire costs, insurance, license/registration/taxes, depreciation and finance charges.
The vehicles studied by AAA had an average price of $32,903, which is $1,502 or 4.78% higher than last year. That suggests that the average cost of owning a new vehicle is even higher, since the average price of new vehicles recently topped $40,000, according to car research site Edmunds.
►Nissan sports car:2023 Nissan Z makes debut: Photos of redesigned sports car
►400-horsepower Nissan Z sports car revealed: Nissan remakes 370Z, drops numbers from nameplate
Depreciation, a measure of how quickly a car loses value, makes up 40% of all ownership expenses, the report says. Cars typically decline in value over time, though used-car values have temporarily increased in some cases due to the new-car shortage.
Fuel is the second-highest cost of owning a vehicle at 17% of the total, while maintenance represents 15%, insurance 14%, taxes 7% and finance 7%.
“We like to talk often about other aspects like cost of fuel or insurance,” said Greg Brannon, AAA’s director of automotive engineering and industry relations. “But whenever you look at what the important costs are for all costs, depreciation is really the major factor.”
What to know before buying:What’s a key step before buying a used car? Getting a pre-purchase inspection
Fuel on average costs 10.72 cents per mile, while maintenance and repairs cost 9.55 cents.
While maintenance costs vary depending on the vehicle, this year’s most expensive are those in the half-ton pickup trucks category, including vehicles like the Ford F-150 or Nissan Titan.
This year’s list includes two new categories that have never been included in the 71 years AAA has done this study: subcompact SUVs and midsize pickups.
With how strained vehicle inventory has been, Brannon says it is important to do research before buying or simply hold off until prices aren’t as high. With a little research, consumers can save thousands of dollars per year.
If you are ready to pull the trigger on a new car, buy a gently used car rather than a new one. New cars lose a tremendous amount of value in the first year of ownership, Brannon says.
By finding a used vehicle that is two to three years old with lower mileage, consumers will pay less, and “that’s because somebody else already paid” off part of the depreciation, Brannon said.
“While we all like that new car smell, which is actually plastic leaching into the car, the truth is that new cars depreciate at a quicker rate than used cars,” he added.
The categories and vehicles studied by AAA:
Small Sedan — Honda Civic, Hyundai Elantra, Nissan Sentra, Toyota Corolla, Volkswagen Jetta
Medium Sedan — Chevrolet Malibu, Honda Accord, Hyundai Sonata, Nissan Altima, Toyota Camry
Subcompact SUV — Chevrolet Trax, Honda HR-V, Hyundai Kona, Jeep Compass, Subaru Crosstrek
Compact SUV — Chevrolet Equinox, Ford Escape, Honda CR-V, Nissan Rogue, Toyota RAV4
Medium SUV — Chevrolet Traverse, Ford Explorer, Subaru Outback, Jeep Grand Cherokee, Toyota Highlander
Midsize Pickup — Chevrolet Colorado, Ford Ranger, Honda Ridgeline, Jeep Gladiator, Toyota Tacoma
Half-Ton Pickup Truck — Chevrolet Silverado, Ford F-150, Nissan Titan, Ram 1500, Toyota Tundra
Hybrid Vehicle — Ford Explorer, Honda CR-V, Hyundai Ioniq, Toyota Prius Liftback, Toyota RAV4
Electric Car — BMW i3, Chevrolet Bolt, Hyundai Kona Electric, Nissan Leaf, Tesla Model 3