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New-Vehicle Ownership Costs Keep Going Up

AAA analysis shows big increase over last year, blames inflation, interest rates.

August 31, 2023
New-Vehicle Ownership Costs Keep Going Up

Half-ton pickups like the Ford F-150 have the highest average cost and have experienced a drop in demand as the costs of owning them now rival that of 'many luxury cars.'

IMAGE: Ford

2 min to read


The annual cost of owning a new vehicle has ballooned due to still-inflated prices and elevated interest rates, a new AAA study shows.

The motor clubs federation, known for its auto insurance and roadside assistance, says the annual average cost of owning and operating a new vehicle this year is $12,182, or $1,015 a month, up about 14% over last year’s figures.

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It points to the growing average manufacturer’s suggested retail price, which it said is now $34,876, up about 5% over last year, combined with the average annual finance charge that MSRP impacts: $1,253, up a whopping 90% year-over-year.

Though the effects of the pandemic on the inflated costs have diminished this year due to improving inventories, “the spillover effects are keeping prices high,” says AAA Director of Automotive Research Greg Brannon.

AAA emphasizes that the price consumers pay for vehicles doesn’t always reflect MSRP, depending on demand.

The nonprofit organization said ownership cost is also probably impacted by:

Depreciation, which it projects to be up 24% year-over-year to an average of $4,538 per year.

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The increase in new-vehicle prices relative to used-vehicle values, which it says have fallen in the past year.

Automakers’ focus on producing more high-end, and therefore more expensive, models.

Fuel, at least for gas-powered vehicles, was the one variable in the annual cost mix that fell, by an average cost per mile of about two cents. But electric-vehicle charging rose by nearly two cents per kilowatt-hour, it says likely due to inflation.

AAA pointed out that half-ton pickups, with the highest average cost, have experienced a decrease in demand as the costs of owning them now rival that of “many luxury cars.”

LEARN MORE: Used Market Hums Along

Originally posted on Auto Dealer Today

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