The yearly cost of car ownership has risen sharply according to the American Automobile Association (AAA) Your Driving Costs study, with the average expense of owning a new car soaring to $12,182 annually in 2023.
AAA reports a nearly 13.6 percent jump year-over-year from the $10,728 of costs new car owners incurred during 2022, with average monthly expenses of car ownership growing from $894 to $1,015.
The Your Driving Costs study identifies the aftereffects of 2022’s scrambled supply chains as largely responsible for the higher costs. Supply chain troubles led to smaller inventories, which in turn caused demand to drive up new vehicle prices. The effects continue to push new car ownership prices higher even after the supply chain and inventory situations improved.
Finance rates are also a big factor in jacking up the expense of new-car ownership for 2023 buyers. The study reports an eye-watering 90 percent increase in the annual average finance charge, reaching $1,253 for a typical vehicle.
“Oversized, luxurious, and expensive vehicles, loaded with extra features” becoming a mainstay of automaker production has also contributed to the mushrooming costs of car ownership, AAA notes. The moderating cost of used cars also played a role, though as GM Authority recently reported, only 12.4 percent of used cars currently cost under $20,000 versus nearly 50 percent pre-pandemic.
Pickups such as GM’s high-demand Chevy Silverado and GMC Sierra trucks are now more costly to operate, the study indicates. Director of automotive research for AAA Greg Brannon remarks that “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.”
In order to keep the cost of new-car ownership under control, the study recommends starting a purchase early to avoid inventory bottlenecks, obtaining pre-approved financing from a third-party institution, and including insurance, gas, and other expenses when preparing an auto budget, among other steps.
Meanwhile, GMC models occupy two of the top three places in the full-size pickup segment for average transaction price (ATP) in Q2 2023, echoing the study’s findings. The models in question include the GMC Hummer EV Pickup and the GMC Sierra.
While GMC Sierra ATP rose 6.2 percent in Q2, average transaction prices for The General overall increased 4 percent. GM total vehicle sales for the second quarter grew 19 percent year-over-year to 689,095 units, approaching pre-COVID figures of roughly 750,000 sales in an average recent second quarter.