HARTFORD, Conn. — The American Automobile Association’s 2024 Your Driving Cost study, or YDC, reports that the cost to own and operate a new vehicle is approximately $12,297 per year, a $115 increase from last year.
AAA says that depreciation and finance charges are largely to blame. Buyers are advised to think about different factors affiliated with owning and operating a new vehicle to fully understand ownership costs, as automakers expand vehicle choices with significant redesigns.
“Buying a new car can be exciting,” said AAA Director of Automotive Research Greg Brannon. “But consumers should fully understand all the costs of owning and operating a new vehicle from purchase to resale.”
Depreciation is the difference between a car’s value when it is originally purchased and when it is sold, and AAA considers it to be the most important cost category associated with vehicle ownership in the 2024 YDC.
This year’s YDC says that cars on average lose around $4,680 annually. It adds that the popularity of oversized vehicles with cutting-edge features has resulted in a rise in new car prices, resulting in higher depreciation costs.
Another key factor is car prices. AAA says the sales-weighted average manufacturer’s suggested retail price, or MSRP, for new vehicles in the YDC is $38,883, which has risen 0.7% over the past year. The average MSRP for each vehicle category is weighted based on its share of the total vehicle sales, meaning higher-selling categories have a larger impact on the average value, according to AAA.
Finance charges are also of significance, as a higher sticker price directly impacts finance costs. AAA says this year’s vehicles incur an average annual finance charge of $1,332, which is a 6% increase from 2023.
The 2024 YDC reveals that EVs have the second-highest total ownership costs because of depreciation, purchase prices and finance charges. It notes that preferences have shifted to more expensive and bigger EVs, sparking growth in the cost categories.
EVs also have the lowest fuel cost of any vehicle type, based on a national average electricity price of 15.9 cents per kilowatt hour, according to AAA, which adds that EVs have the lowest maintenance cost because of their design and powertrain.
Hybrid vehicles have the second-lowest total ownership costs behind small sedans, AAA reports. They benefit from excellent fuel economy and low maintenance costs and rank near the middle in depreciation, financing and insurance costs. One in three U.S. adults say they would be “very likely” or “likely” to buy a Hybrid, according to a recent EV consumer sentiment survey.
“Hybrid vehicles are a reasonable, affordable option for those who want to try the benefits of electrification,” said Brannon. “Hybrids benefit from excellent fuel economy, low maintenance costs, depreciation and insurance – making them an affordable option for car buyers.”
AAA says the growth in popularity of top-selling EV and Hybrid models such as medium sedans, compact SUVs, medium SUVs and pickup trucks has become a notable trend forcing automakers to diversify their lineups and include more attractive models.
When buying a new vehicle, AAA recommends creating a monthly or annual budget and factoring in ownership and operating costs before making a purchase.
Also, one should keep each transaction and negotiation separate from the other, which refers to the cost of the car, the finance rate and the trade-in value. According to AAA, potential buyers should acquire pre-approval from a financial institution before having a conversation regarding finance rates with the car dealer. This will help ensure that the buyer gets the best lending rate available.
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Dalton Zbierski is a digital content producer and writer at FOX61 News. He can be reached at dzbierski@FOX61.com.
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