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AAA: Annual Cost To Own A New Vehicle Now Tops $12,000

Written by CarPro | Sep 7, 2023 3:45:00 PM

The cost to own a vehicle continues to rise - and significantly so. In 2023, the average cost to own and operate a car is more than $12,000. Compare that to last year's roughly $10,700 a year. 

AAA's 2023 Your Driving Costs


The new data comes via AAA's Your Driving Costs (YDC) annual report. Researchers say 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.  In 2022, 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 Greg Brannon, AAA’s director of automotive research. “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.” 

MSRP and Financing

Researchers say this year's higher ownership costs are driven by record new vehicle prices and a 90 percent increase in finance rates.

AAA says 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. Researchers say it's important to note that MSRP doesn't mean that's what the buyer actually paid and that actual purchases prices may vary depending on demand.

A higher sticker price directly impacts finance costs,  with this year’s vehicles boasting an average annual finance charge of $1,253, a 90% increase from the previous year. 

Other Factors Driving Up Costs
  • Depreciation is up 24%.  Depreciation 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. 

On the other hand, fuel costs are actually down this year, by roughly 2 cents per mile.  Last year fuel costs were one of the higher annual cost categories.  Meanwhile, the cost of charging EVs is up almost 2 cents per kWh over last year, from 13.9 cents per kWh to 15.8 cents per kWh.  AAA says the increase is likely accounted for by higher-than-expected inflation, according to the U.S. Energy Information Administration (EIA). 

Highest/Lowest Cost of Ownership


AAA uses five top-selling models in each of nine vehicle categories to calculate ownership costs across a number of areas. These are then combined and averaged to determine the overall cost to own a new car in 2023. 

  • depreciation
  • finance
  • fuel
  • insurance
  • license/registration/taxes
  • maintenance/repair/tire costs

The costs for each of these categories as listed below are an average calculated over five years and 75,000 miles.

Highest Cost of Ownership

Half-ton pickups have the highest cost of ownership in the YDC study. Researchers say the pickup truck market has slowed over the past 12 months, as gas prices trend high and financial costs climb.   Pickup trucks excel at hauling and towing, although many buyers do not use them for these purposes. Potential buyers should remember that the unique capabilities of pickups come at a high cost of over $1 per mile. 

“The once popular pickup truck is now seeing a slight decline in demand as these vehicles have become increasingly expensive, rivaling the price of many luxury cars,” said Brannon. “As interest rates continue to climb, this adds a layer of expense per month that consumers should consider when shopping for their next vehicle.”    

Half-Ton Pickups have an overall driving cost of $1.06/mile. Midsize SUVS are next in line at 79.81¢/mile, followed by mid-size pickups at 81.72¢/mile.

Lowest Cost of Ownership


Small sedans have the lowest cost of ownership at 59.59¢ a mile.  Medium sedans are next at 73.65¢/mile but they are the most expensive to insure. Subcompact SUVs are the third lowest for depreciation which puts the cost of ownership at 64.79¢/mile.

Check out AAA's Driving Your Costs fact sheet here → 

 
Electrified Vehicles

Electric cars cost 67.41¢/mile to own. AAA says they are the least expensive for maintenance, repair & tire costs, fuel and licenses, registration & taxes, but the highest for depreciation. Hybrids are less expensive to own at 64.33¢/mile. They are the second least expensive for fuel & maintenance costs.

AAA Car Buying Advice

With all this in mind, AAA is sharing some tips when it comes to car buying.


  • Know all the expenses associated with ownership to negotiate the best deal.  
  • Start early! Due to limited inventory, consumers may have fewer choices regarding a specific vehicle model. They may have to wait for delivery or even pre-order the vehicle of their choice.  
  • Before discussing finance rates with the car dealer, obtain pre-approval from their financial institution (e.g., Bank, Credit Union, AAA, etc.). By getting pre-approval, they will have a threshold of the best lending rate they’ll pay. Buyers can use their pre-approval to negotiate if the dealer offers a higher rate. 
  • Don't just think about monthly payments. You need to factor in things like insurance, gas, routine maintenance, etc. 
  • Typically, three negotiations occur when purchasing a vehicle – the cost of the car, the finance rate, and the trade-in value. Keep each transaction/negotiation separate from the other.  
    • The Purchase Cost: Check multiple websites, including the manufacturer, to understand what the vehicle sells for in your area. You could save hundreds of dollars by driving outside of your immediate location and expanding your search area.  
    • The Finance Rate: The biggest factor in obtaining a favorable interest rate is one’s credit score. Higher credit scores will result in lower interest rates. Obtain pre-approval for an auto loan, determine the highest interest rate you might be charged, and then ask the dealer if they can offer a lower interest rate. If they can, you save money.  
    • The Trade-In Value: While evaluating your trade-in, you must determine the vehicle’s condition. Most used vehicles fall into the “good” or “fair” category, which is the most common. To determine the value, check various websites to learn the average trade-in value. *Remember, selling a vehicle independently on your own may increase the value amount you may receive for the vehicle. However, there are safety aspects to consider, proper paperwork, bill of sale, etc. Trading the vehicle can often be easier and hassle free. Typically, three negotiations occur when purchasing a vehicle – the cost of the car, the finance rate, and the trade-in value. Keep each transaction/negotiation separate from the other
Don't forget you can also check out CarPro Show host Jerry Reynolds' tips for navigating the dealership finance office here →

Calculate Your Driving Costs

If you'd like to calculate your driving costs you can use AAA's handy  Your Driving Costs online calculator. Data is available for new and used vehicles (five model years back). You can customize the results based on location and other personal driving tendencies.   



Photo Credit:  gcpics/Shutterstock.com.