AAA advises car buyers to budget for more than the monthly payment as car prices increase
NASHVILLE, Tenn., (August 19, 2021) — According to the latest research from AAA, the average annual cost of new vehicle ownership is $9,666, or $805.50 per month. The biggest factor pushing the nearly $10,000 annual price tag is depreciation. It accounts for 40% of all ownership expenses outpacing additional costs like fuel and maintenance. With low inventory at dealerships due to the semi-conductor chip shortage, AAA urges new car buyers to be aware of all the expenses associated with ownership so that they can negotiate the best deal for their budget.
“Consumers have to remember the expense of owning a car goes far beyond the monthly payment,” said Greg Brannon, AAA’s director of automotive engineering and industry relations. “Plus, we are seeing costs increase for a number of products recently, and cars are no exception. This trend will likely continue as new vehicles come equipped with the latest technology, which naturally drives up the sticker price.”
The 2021 AAA Your Driving Cost study reviewed nine categories of vehicles – consisting of 45 models – to determine the average annual operating and ownership costs of each. AAA selects top-selling, mid-priced models and compares them across six expense categories: fuel, maintenance/repair/tire costs, insurance, license/registration/taxes, depreciation and finance charges. Depreciation – a measure of how quickly a car loses value – remains the single biggest cost (40%) of new vehicle ownership. Other key findings of this year’s Your Driving Costs include:
As part of the Your Driving Costs study, AAA tracks changes in buying patterns and makes changes to the type of vehicle categories considered to match those trends. For several years now, buyers have moved away from previously popular categories like sedans to newer styles like compact SUVs. For 2021, AAA added two new categories: subcompact SUVs and midsize pickup trucks. These replaced large sedans and minivans, both of which no longer offer enough new models to be tracked.
The average price of a new vehicle for 2021 is $32,903, which is $1,502 (4.78%) higher than last year, but is mostly due to the addition of new models to the Your Driving Costs study. Models in the small sedan, medium sedan, medium SUV and hybrid categories averaged an increase in vehicle price of $3,064, led by hybrids as consumers opt for larger (hence more expensive) models in this category. Pickup trucks saw an increase of $4,684 (an average of 11%); however, this has not affected their popularity, as they remain the best-selling category of those included in the study.
Buying a car is the second biggest purchase behind a home that most people will make in their lifetime. The car buying process can be seen as difficult, time-consuming and stressful.
“With strains on inventory this year, it is critical for consumers to do as much research as possible before beginning the buying process, “ said Megan Cooper, spokeswoman, AAA – The Auto Club Group. “Understanding all of the options available as well as individual needs can ease some of the anxiety associated with purchasing a car.”
AAA offers the following guidance when it comes to shopping for your next vehicle:
Consumers can calculate their annual driving cost through AAA’s digital brochure on Newsroom.AAA.com. AAA offers a number of resources consumers can use while car shopping including the AAA Car Guide and AAA’s car buying program.