It costs $279 more to own a car than it did just last year. According to new AAA research, the true annual costs of new vehicle ownership rose 5% in 2019 to $9,561. That’s the highest cost since AAA began tracking expenses in 1950.
COVID-19 has had several effects on the car-buying market. First, of course, is an overall drop in sales due to a number of economic factors. Then there is the issue of inventory, which is limited due to many car manufacturers halting vehicle production in order to switch to manufacturing ventilators and/or adjusting to consumer demand. As a result, dealerships are not offering as many price incentives as they normally would stimulate sales. In fact, the price of a new car has increased.
While many consumers focus on the sticker price, there are many other costs associated with new car ownership to consider. The new figures come from “Your Driving Costs,” which reviews nine categories of vehicles to determine the average annual operating and ownership costs of each. AAA focuses on top-selling, mid-priced models and compares them across six expense categories: fuel prices; maintenance/repair/tire costs; insurance rates; license/registration/taxes; depreciation; and finance charges. Of the six categories, only fuel price and financing dropped in cost from last year.
Depreciation, a measure of how quickly a car loses value, continues to be the biggest expense of owning a new car, especially as sticker prices continue to increase. On average, it accounts for 39% of the total costs for a new car. AAA’s Your Driving Costs found that in 2020, depreciation was up 12% over last year.
Other key findings in this year’s “Your Driving Costs” study include:
- Pickup trucks had the highest overall driving costs while small sedans had the lowest
- Medium SUVs had the highest maintenance and repair costs while electric vehicles had the lowest
- By percentage, the category with the largest increase was license/registration/taxes. It rose 13% to a price of $851 per year.
To learn more, determine your own costs, and download the 2020 “Your Driving Cost” brochure, go to AAA.com/YourDrivingCosts.
For more information on the car-buying process, visit AAA.com/AutoBuying, a comprehensive resource that can help make the process more manageable.