Annual New Car Ownership Costs More Than $12K

Staff Writer Business, Police & Fire, RSS, RSS-Business

A’s Your Driving Costs (YDC) has been a reliable data source for the expenses associated with owning and operating a brand-new vehicle for more than seven decades. Based on the latest figures, the average cost of owning and operating a new vehicle in 2023 has increased significantly, with an annual expense of $12,182 or a monthly cost of $1,015. This is a sharp increase from 2022 when the average yearly cost was only $10,728, or $894 monthly.

“It’s important for car buyers to clearly understand the costs associated with owning a new vehicle,” said Jana Tidwell, spokesperson for AAA Mid-Atlantic. “Due to global supply chain issues and constrained inventory of new vehicles, car prices rose dramatically in 2022. And while the situation continues to improve, the spillover effects are keeping prices high.”

The overall average manufacturer’s suggested retail price (MSRP) of the new vehicles in the 2023 YDC study is $34,876. This is $1,575 (4.7%) higher than last year. It is important to note that MSRP does not always correspond to a consumer’s actual purchase price and may vary depending on demand. Furthermore, a higher sticker price directly impacts finance costs, with this year’s vehicles boasting an average annual finance charge of $1,253, a staggering 90% increase from the previous year.

The change in the annual cost of owning a new vehicle is also likely driven by:

• Depreciation, which is the difference between the car’s value upon purchase and the value of the car when sold. According to this year’s YDC projections, 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 (up almost $1,600) 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.

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