Owning a new vehicle has become significantly costlier this year, with total expenses averaging $12,297 annually, or $1,024.71 each month -- an increase of $115 from last year, primarily due to escalating depreciation and finance charges, according to AAA's latest Your Driving Cost (YDC) study.
Depreciation remains the largest expense for vehicle owners, with the average car losing about $4,680 in value each year.
"The value drop reflects not just the age of the vehicle but also the impact of new, feature-rich models entering the market," explained Greg Brannon, AAA’s director of automotive research.
Finance charges have also seen a notable uptick. This year, the average new vehicle incurs an annual finance charge of $1,332, up 6% from the previous year, closely tied to a modest increase in the average manufacturer's suggested retail price (MSRP), which now stands at $38,883. This is a 0.7% rise over the previous year, influenced by the surge in prices for popular models like pickup trucks, which have an impact on the overall market averages.
EVs and hybrids, meanwhile, are emerging as players in the cost analysis. Although EVs face the second-highest total ownership costs due to high depreciation and purchase prices, they benefit from the lowest fuel and maintenance expenses. Hybrids follow closely, leveraging their fuel efficiency and lower maintenance costs to become a cost-effective option for many buyers.
"Hybrids offer an economical path for those considering electrified vehicles, balancing initial costs with ongoing savings," said Brannon.
This year's YDC has expanded to include a special analysis of EVs and hybrid models across four major vehicle categories -- medium sedans, compact SUVs, medium SUVs, and pickup trucks.
The study, leveraging data from various sources including Vincentric LLC, uses a standardized methodology to estimate costs over a typical five-year ownership period covering 75,000 miles.
"These figures help consumers make informed decisions, emphasizing the importance of understanding all facets of vehicle ownership," Brannon added.
