New AAA study shows rise in new car ownership costs

Banking & Financial Services
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Marshall L. Doney President and CEO | AAA, FL

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ORLANDO, FL. (Sept. 5, 2024) – This year’s Your Driving Cost (YDC) study reveals that the total cost to own and operate a new vehicle is $12,297 or $1,024.71 monthly, an increase of $115 from 2023. The leading cost culprits for buyers are depreciation and finance charges. With automakers adding more vehicle choices with major redesigns, AAA advises buyers to consider various factors associated with owning and operating a new vehicle to fully understand ownership costs.

Depreciation, the difference between the car’s value upon purchase and when sold, is the most significant cost category associated with vehicle ownership in this year’s analysis. On average, cars in this year’s YDC lose $4,680 annually. The popularity of oversized vehicles with cutting-edge features has led to an increase in new car prices, which results in higher depreciation costs.

Other factors driving new ownership costs:

Car Prices—The sales-weighted average manufacturer’s suggested retail price (MSRP) for new vehicles in the study is $38,883, an increase of 0.7% over last year. It’s important to note the MSRP may not always reflect the actual purchase price and can vary based on demand. The average MSRP for each vehicle category is weighted based on its share of total vehicle sales. This means higher-selling categories, such as pickup trucks, have a larger impact on the average value.

Finance Charges—A higher sticker price directly impacts finance costs, with this year’s vehicles incurring an average annual finance charge of $1,332, a 6% increase from the previous year.

This year, EVs have the second-highest total ownership costs due to depreciation, purchase prices, and finance charges. Preferences have shifted to more expensive and larger EVs resulting in growth in these cost categories. EVs have the lowest fuel cost of any vehicle type based on a national average electricity price of 15.9 cents per kilowatt hour (kWh). Plus, because of their design and powertrain, EVs have the lowest maintenance costs.

Hybrid vehicles have the second-lowest total ownership costs behind small sedans. They benefit from excellent fuel economy and low maintenance costs and rank near the middle in depreciation, financing, and insurance costs. According to this year’s EV consumer sentiment survey, one in three U.S. adults (31%) say they would be “very likely” or “likely” to buy a Hybrid.

NEW – Special Analysis Comparing Cost of EV and Hybrid Ownership to Gas-Powered

This year AAA expanded YDC by comparing top-selling EVs and Hybrid models in four popular vehicle categories – medium sedan, compact SUV, medium SUV, and pickup truck. Over the past few years their growth in popularity has been a significant trend requiring automakers to expand their lineups to include more appealing models. This bonus analysis will give consumers a snapshot of ownership costs for select EV and Hybrid models compared to their gas-powered counterparts.

*Please note: Not all categories and models are available for analysis and cannot be directly compared to the average ownership total.

Car Buying Advice

With higher purchase prices impacting other cost categories it’s important to remember these car-buying tips when researching all options:

Create a monthly or annual budget and factor in ownership and operating costs before purchase.

Keep each transaction and negotiation separate from the other –the cost of the car,the finance rate,andthe trade-in value.

Obtain pre-approval from a financial institution (e.g., Bank,Credit Union AAA,etc.)before discussing finance rates withthecar dealer toen sureyou getthe best lending rate availableto you.

Thereare quitea few options(onlineandinstore)availabletoconsumerswhen considering where tob uya usedvehicle besidesadealership.Visit your localAAAwhich may offer discountsfor members.

Additional AAA Support:

Your Driving Costs calculator: Customizable digital tool that offers cost analyses for specific vehicles by category,newandused cars(upto five model years back).

AAA Car Guide: Annual guide that ranksandratesvehicleswiththe latest automotive technology.

AAA’s Car Buying Program: Comparisonsforconsumerstousewhilecarshoppingandbuying.

EV101(Digital Buyer’s Guide): Resourceandeducational guideforconsumerstousewhileelectricvehicle shoppingandbuying.

Repair Cost Calculator: Repaircost breakdownforpartsandlabor includingAAAmemberdiscounts available when visitingAAA Approved Auto Repair facilities.

Methodology

Overall YDC Analysis

AAA usesaproprietary methodologytocalculatethecostsofowningandoperatinganewcarintheUnited States.Dataisgatheredfromvarious sourcesincluding Vincentric LLC,and incorporates standardized criteria toestimatecostsofusinganewvehicleforpersonaltransportationoverfiveyearsand75 000 milesofownership.TheuseofstandardizedcriteriaensuresthatAAA estimatesareconsistentwhencomparingdrivingcostsofdifferentvehiclet ypes.Actual drivingcostswillvarybasedondrivinghabitslocation operating conditionsandotherfactors.

AAA evaluated nine categoriesofvehicles–consistingof45models–todetermineanewvehicle'saverageannualoperatingandownershipcos ts.AAAselectstopsellingmidpricedmodelsandcomparethem acrosssixcategories:fuelmaintenance/repair/tirecostsinsurancelicense/registration/taxesdepreciation,andfinancecharges.Thestudyassumesafiveyearownersh ipperiodwiththevehiclebeingdriven15 000 miles/annually(or atotalof75 000 miles).

EV&HybridCostComparisons

AAA evaluatedfourcategoriesofEVsandHybrids–consistingof11totalmodels–andcompared them acrosssixcostcategories:fuelmaintenance/repair/tirecostsinsurancelicense/registration/taxesdepreciation,andfinancecharges.Thestudyassumesafiveyearownersh ipperiodwiththevehiclebeingdriven15 000 miles/annually(or atotalof75 000 miles).

Duetoalimitednumberofmodelswithsignificantsalesavailableinmanyvehiclecategori esonlyfourvehiclecategorieswereselected(mediumsedanscompactandmediumSUVsandpickuptrucks)foranalysisandcomparison tot hosecorrespondingICEcategoriesThereforeoverallresultsfromtheEV/HybridanalysiscannotbedirectlycomparedtotheoverallresultsfromtheregularY DCstudy.

About AAA

Startedin1902byautomotiveenthusiastswhowantedtochartapathforbetterroadsinAmericaandadvocateforsafemobilityAAAhastransformedintooneofthe largestmembershiporganizationsTodayAAAdelivers exceptionalroadside assistancehelps travelersplan theirdreamvacationsadventuresoffers exclusivememberdiscountsandbenefitsprovidestrustedfinancialinsurance servicesalltoenhancethelifejourneyofour64+millionmembersacrossNorthAmericaincludingover57millionintheUnitedStatesTolearnmoreaboutallAAAA offersorbecomeamembervisitAAA.com

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