Our driving habits may be changing during the pandemic - for example some people may be driving less - but one thing hasn't changed. Car ownership costs keep going up. The average annual cost of new vehicle ownership is closing in on $10,000, according to the 2021 AAA Your Driving Cost study. It lists the average annual cost of new vehicle ownership as $9,666, which breaks down to $805.50 per month. That's up from $9,561 in the 2020 study.
Researchers say the biggest factor pushing the nearly $10,000 annual price tag is depreciation. It accounts for 40% of all ownership expenses and outpaces additional costs like fuel and maintenance. All things to consider before you make a buying decision.
“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.”
Read more about Budgeting How Much Car You Can Afford here
New Vehicle Ownership Costs
The study estimates the costs of using a new vehicle for personal transportation over five years and 75,000 miles of ownership. Researchers reviewed nine categories of vehicles – consisting of 45 models – to determine the average annual operating and ownership costs of each. AAA did axed the large sedans and minivans categories for 2021 saying they don't offer enough new models to be tracked. They were replaced by two new categories: subcompact SUVs and midsize pickup trucks.
AAA says it 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.
Some key highlights:
- Fuel Costs: on average, fuel costs 10.72 cents per mile. This is based on data from May 2020 – May 2021, which does not include recent spikes in gas prices. Fuel costs vary widely by vehicle type, ranging from a low of 3.66 cents per mile for electric vehicles, to 15.81 cents per mile for pickup trucks.
- Maintenance, repair and tire costs: on average, maintenance and repair costs 9.55 cents per mile. Just like fuel, electric vehicles are on the lower end of the spectrum, costing 7.70 cents per mile, while medium sedans are the most expensive at 10.43 cents per mile.
- Finance charges: the cost of vehicle loans decreased due to a drop in the prime lending rate. The average interest rate in 2021 is 4.12%, which is 1.056 percentage points lower than last year.
In AAA's 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 (and more expensive) models in this category. Pickup trucks saw an increase of $4,684 (an average of 11%), but despite the price hike they remain the best-selling category of those included in the study. A few more overall highlights from the study:
- Small sedans have the least expensive overall ownership costs
- Medium sedans are the most expensive to insure
- Compact SUVs are the least expensive to insure
- Mid-size pickups have the third overall highest ownership costs
- Hybrid vehicles have the 2nd least expensive fuel and maintenance costs
- Electric vehicles have the lowest maintenance, repair and tire costs.
New Vehicle Prices
In AAA's study of 45 2021 models, researchers found that the average price of a new vehicle is $32,903, which is $1,502 (4.78%) higher than last year. Note, Kelley Blue Book reports the overall new vehicle average transaction (ATP) price in July was much higher, a record $42,736. The AAA study looked at only 45 models. KBB's price analysis pulls from its database of estimated average transaction prices.