The cost of new car ownership in the United States is rising rapidly, according to a recent study conducted by the Automobile Association of America (AAA).
According to the study, the average annual cost of new vehicle ownership is around $9,666, equivalent to $805.50 per month. AAA says the biggest contributing factor behind rising annual car ownership costs is depreciation, which accounts for 40 percent of all ownership expenses. Depreciation can be tricky for consumers to navigate, as it is a hidden cost of car ownership that isn’t fully realized until the owner turns around to sell the vehicle. It can also be hard to predict which cars will depreciate and which will hold onto the majority of their original MSRP.
According to AAA, the average price of a new vehicle in 2021 is around $32,903, which is $1,502 (or 4.78 percent) higher than in 2020. Not surprisingly, pickup trucks saw the largest year-over-year increase at an average of $4,684 (11 percent). Despite the gains, pickup trucks remain the most popular vehicles in America by a wide margin. AAA says models in the small sedan, medium sedan, medium SUV and hybrid categories “averaged an increase in vehicle price of $3,064,” spurred on by new hybrid models, which are more expensive to purchase, but can also offer long-term fuel savings.
Car purchase and ownership costs have been a hot topic in 2021, with the semiconductor chip shortage reducing new vehicle inventory and driving up demand for used cars. The chip shortage is expected to last into early next year, so it seems the trend of rising new and used vehicle prices is here to stay for the foreseeable future. AAA says that by doing research into depreciation, fuel costs, maintenance costs and other related vehicle ownership expenses, customers can navigate rising vehicle costs and still find themselves a good deal.
“The expense of owning a car goes far beyond the monthly payment,” said AAA spokesperson Mark Jenkins. “Costs are increasing for a number of products, and cars are no exception. With strains on inventory this year, it is critical for consumers to do as much research as possible before beginning the buying process.”