It Costs An Average Of $12k A Year To Own A New Car

It is no shock to anyone why the marketplace for new cars can feel like a battleground. Prices are out of reach for many potential buyers, availability is an issue, and some potential customers will make the decision to hang onto their current vehicles for a few more years before they are in a better financial position to make such a large purchase.

According to AAA, the average annual cost for new car ownership has risen to $12,182, or $1,015 per month. This is a large increase to 2022, in which the average annual cost for new car ownership was $10,728, or $894 per month.

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Why Is It More Expensive To Own a New Car in 2023?

“It’s important for car buyers to clearly understand the costs associated with owning a new vehicle,” says 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.” 

The average MSRP for new vehicles in 2023 calculates to $34,876. This is $1,575 (4.7%) more than the average price of a new car in 2022.

These costs are the culmination of multiple factors such as downpayment, monthly payments, insurance, gas, and maintenance.

Depreciation is another factor when determining the value of a new vehicle as soon as it is sold. According to AAA, a new vehicle is expected to depreciate an average of $4,538 per year over the first five years of ownership. This is a 24% increase in depreciation when compared to the previous year.

Choice in vehicle purchases can also determine one’s annual ownership costs. Half-ton pickup trucks have higher costs in both fuel economy and ticket price. However, rising fuel costs have also slowed down the rate of new truck purchases in the last twelve months. Due to their size and hauling and towing abilities, pickup trucks tend to cost as least $1 per mile to own.

“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,” says 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.”