The average cost of owning and operating a car has gone up this year due to higher MSRP figures and increased finance costs, among other things. In 2023, the annual expense of vehicle ownership increased to $12,182, which comes out to a monthly cost of $1,015, according to the American Automobile Association.
AAA has been calculating yearly ownership costs for decades, and its latest study assumes a five-year ownership period wherein owners drive 15,000 miles per year for a grand total of 75,000 miles. The consumer agency looked at nine classes of vehicles (45 models in all) and compared their associated costs across the following six categories: fuel, maintenance/repair/tire costs, insurance, license/registration/taxes, depreciation, and finance charges.
Now that everything is more expensive, AAA found this year’s cost has gone up significantly over that of last year: in 2022, the annual price of ownership was $10,728, or $894 per month. In a span of 12 months (or less), ownership cost has risen by over $100 per month. And for the first time ever, the average monthly price of owning a car in the U.S. has breached the $1,000 mark.
The prices quoted by AAA’s yearly report factor in monthly car payments as well as insurance premiums, gasoline, routine maintenance, and other expenses. The idea is to give buyers a clearer understanding of what it truly costs to own and drive a car in the U.S. The thing is, people often use their monthly loan payment as a barometer when there are many other factors to consider.
While it’s true that a car’s sticker price directly affects monthly payments, the MSRP also affects finance charges. Average vehicle MSRP in 2023 was $34,876, which is nearly five percent higher than last year. And annual finance charges averaged $1,253 this year, which is reportedly a 90% increase from last year.
Chalk it up to higher interest rates, but other factors that raised average costs include more aggressive depreciation on new cars: AAA says vehicles coming off the lot for the first time will “depreciate by an average of $4,538 per year over five years of ownership, up 24% over 2022.”
And no single car or vehicle type is immune from higher ownership costs, given that automakers insist on “producing more oversized, luxurious, and expensive vehicles, loaded with extra features that bump up prices even more,” per AAA.
Pickup trucks in particular have been affected by price bloat, and owning one of the most popular vehicles in America now comes in at a high cost of over $1 per mile. This led to a slight decline in demand for trucks, though full sizers remain more expensive to own than their midsize siblings. But don’t worry; automakers are hard at work making bigger, more expensive versions of these, too.