The cost of living in the United States has sharply increased over the years, and if you need a new car, it won’t be pleasant. Last year, AAA‘s Your Driving Costs (YDC) revealed that the average yearly cost was around $10,728, which equates to about $894 a month. However, as interest rates skyrocketed since then, coupled with dealerships continuing to add massive markups to cars for no reason except to line their own pockets, things have only gotten worse. If you didn’t know, YDC accounts for all expenses of owning and operating a brand-new vehicle, not just the monthly payment if you’re financing.
United States Cost of Vehicle Ownership: The Latest Data
Based on the latest figures by AAA, the average cost of owning and operating a new vehicle in 2023 has increased to a painful annual expense of $12,182 or $1,015 per month. The overall average manufacturer’s suggested retail price (MSRP) of the new vehicles in the 2023 YDC study is around $34,876. That’s about 4.7% higher, or $1,575 more than last year. While an MSRP doesn’t always correspond to a consumer’s purchase price, as we’ve seen over the past few years, people are impacted by painful finance costs. This year’s vehicles boast an average annual finance charge of $1,253, which is 90% more than last year.
While everyone has their ideas as to what’s causing these massive monthly fees, AAA has a pretty good idea as to what’s driving up the annual cost of owning a new vehicle, including:
- Depreciation is the difference between the car’s value upon purchase and the value when sold. This year, new vehicles are expected to depreciate by an average of $4,538 per year over five years of ownership, up 24% over 2022.
- The jump in new vehicle prices compared to used vehicle values that have experienced a decline in the past year.
- Automakers across the board have focused on producing more oversized, luxurious, and expensive vehicles, loaded with extra features that bump up prices even more.
Of course, other factors are also at play, but that’s what AAA analysts highlighted. Fuel cost also contributes to the high cost of owning a vehicle. But, this year’s average cost per mile has decreased by around 2 cents per mile. By comparison, the cost of charging EVs has increased by almost 2 cents per kWh over last year. The increase is likely caused by higher-than-expected inflation. Half-ton pickups have the highest average driving cost among all vehicle categories thanks to their size, fuel economy, and price. This may be why the pickup truck market has slowed over the last 12 months, as gas prices have been high and financial cost continues to rise.