The annual cost to own a new car has gone beyond the $10,000 mark, according to a study by the American Automobile Association (AAA). Owning and operating a brand new car in 2022 will cost you as much as $10,728 annually or $894 per month.
The annual driving costs study revealed that the average yearly cost in 2022 is $10,728 or $894 per month. That’s a considerable cost increase from 2021 when the average yearly cost was $9,666 or $805.50 per month. The most significant factor pushing this year’s price tag is fuel.
Cost of Car Ownership in 2022
The 2022 cost of owning and operating a new car has gone up by 11% in just one year when the average yearly cost was $9,666 or $805.50 per month in 2021. Fuel prices have been a major factor in the hike in this year’s average annual price tag.
The study evaluated nine categories of vehicles that included 45 models to help determine a new vehicle’s average annual operating and ownership costs. Factors weighed in the study included fuel, maintenance/repair/tire costs, insurance, license/registration/taxes, depreciation, and finance charges.
In 2022, fuel prices averaged 17.99 cents per mile or $3.999 per gallon. Gas prices have seen a dramatic climb since early March, and, as a result, the cost of vehicle ownership has increased accordingly. Due to the high volatility of fuel costs, car buyers are weighing alternative ways to budget for the cost of vehicle ownership. One way they are doing this is by exploring electric vehicles as an option for their next car purchase in a bid to save on fuel costs.
Car Ownership Costs
The annual $10,728 price take comes by taking into a five-year ownership period, with the vehicle being driven 15,000 miles a year annually owners stand to incur some costs. These include an annual average cost in depreciation ($3,656); loan financing ($658); fuel (17.99 cents a mile); insurance ($1,588); license, registration and taxes ($675); and maintenance, repair and tires (9.68 cents a mile).
“High gas prices are not only changing Americans’ driving habits – they’re also changing the way Americans think about future car purchases. While sticker price remains a focus for new car buyers, consumers are also paying closer attention to operational costs like fuel, maintenance, and insurance,” said Gene LaDoucer, AAA’s regional director of public affairs.
What car has the lowest total cost of ownership?
In terms of lower costs, electric cars appear to be more appealing to possible car buyers due to their ease in cutting costs. For example, an electric vehicle owner will spend about 4.0 cents per mile to charge their vehicle at home, while the owner of a gas-powered vehicle will spend an average of 18.4 cents per mile to gas up. Assuming both drive 15,000 miles throughout a year, it would cost approximately $2,700 a year to fuel the gas-powered vehicle and $600 a year to charge the electric vehicle. Electric cars compared to small sedans stand to save owners some $2,100 annually.
Besides saving fuel costs, electric cars have the lowest maintenance, repair, and tire costs. This is because gas-powered vehicles require additional maintenance such as oil changes, air filter replacements, and inspection of mechanical components not present in electric vehicles. Additionally, electric vehicles have the lowest fees due to federal and state rebates offered to buyers of new electric vehicles as a purchase incentive.
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Given the time frame, this is almost entirely due to higher costs of fuel. Pretty straightforward.