Given what we’ve all experienced in this inflationary era, it should come as no surprise that the average annual cost to own a new car in 2022 has increased markedly from 2021. AAA reports that new vehicle owners this year will pay, on average, $10,728 per year, or $894 per month, to operate their new ride. Last year those figures were $9666 per year or $805.50 per month.
“Consumers are paying more attention when purchasing a new vehicle since everything is more expensive right now,” said Greg Brannon, AAA’s director of automotive engineering. “With the recent increase in fuel prices, more and more people want to know the true costs of owning a car beyond their monthly payment.”
In its newly released study, AAA looked at 45 models in nine vehicle segments to come up with a new car’s average cost of ownership and operation. Each model was evaluated in terms of costs for fuel, maintenance & repair, insurance, license & registration, taxes, depreciation and financing. It comes as no surprise that the most impactful factor here is the steeper cost of gasoline.
Due to the higher cost of fueling an internal combustion engine, many new car shoppers are now considering electric vehicles. AAA’s 2022 Your Driving Costs data show that the annual cost to own an electric vehicle is second only to small gasoline-powered sedans. And when looking at electric cars versus all gas-powered vehicles, the annual cost of going electric presents a staggering savings in terms of cost per mile: 4.0 cents for the electrified car, 18.4 cents for the gas vehicle.
Annualizing the cost of fuel makes an impressive point in favor of electric vehicles. Looking at drivers who tally 15,000 miles per year, the cost to gas up a conventional engine is about $2700. Traveling that same distance using a battery-powered car that charges at home costs only about $600, a savings of $2100.
Additionally, electric vehicles also offer noticeable savings where maintenance, repair and tires are concerned. AAA reports that no gasoline-powered vehicle cost less. Owners of battery-powered vehicles also pay less in fees because they can capitalize on rebates offered by federal and state agencies.
Regardless of what power plant a new vehicle buyer is looking for, AAA does offer both tried & true recommendations for car shopping, as well as a few tips on dealing with the realities of this new era:
• Start early! Due to limited inventory, consumers may have fewer choices regarding a specific vehicle model. They may have to wait for delivery or even pre-order the vehicle of their choice.
• Obtain pre-approval from their financial institution (e.g., Bank, Credit Union, AAA, etc.) before discussing finance rates with the car dealer. By getting pre-approval, they will have a threshold of the best lending rate they’ll pay. Buyers can use their pre-approval to negotiate if the dealer offers a higher rate.
• Create a budget and factor in the different elements of ownership before purchase – not just monthly payments. Other factors to consider when making the budget include insurance, gas, routine maintenance, etc.
• Typically, three negotiations occur when purchasing a vehicle – the cost of the car, the finance rate and the trade-in value. Keep each transaction/negotiation separate from the other.
For more detail on what drives new car ownership costs, click here to visit AAA.
