Finally the national average is under $4. But what’s the cause – and for how long – can we depend on this relief at the pump?
The annual cost of owning and operating a new car ballooned nearly 11% in the past year to $10,728 — or $894 per month — according to AAA's Your Driving Costs study.
That represents a considerable hike from 2021, when it cost an estimated $9,666, or $805 per month, to own a new car. Costs normally don’t rise that dramatically year over year: In 2021, annual new car ownership costs rose 5% over 2020’s figures, according to AAA.
The cost estimate in the 2022 study doesn't include the monthly principal payment for those who take out a loan, so drivers will want to make sure to budget for the full cost of car ownership when buying a new car.
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Why is it more expensive to own a new car?
Unsurprisingly, the AAA report cited fuel prices as the main culprit behind this year's sky-high rise. Gas prices climbed steadily for more than a year before peaking at an average of over $5 a gallon in June, and U.S. drivers are on track to spend up to $562 billion on gasoline this year — twice as much as they spent on gasoline in 2020. The growing price of gas is being fueled by overall inflation, as well as by supply-chain impacts from Russia’s invasion of Ukraine.
The costs of all goods and services in the U.S. is up 8.5% year over year, according to the Bureau of Labor Statistics, and gas prices rose a whopping 44% over the same period. National pump prices have eased to an average of $3.95 per gallon (regular unleaded), which is still considerably higher than the $3.18 a gallon in August 2021.
The AAA report, released Aug. 11, assumed an average fuel price of 17.99 cents per mile, or roughly $3.99 per gallon, based on a weighted average of gas prices in the first five months of 2022. Gas prices continued their climb after the report was conducted (and remain volatile), and AAA said in a press release that new car ownership costs for 2022 may end higher than the report estimates.
Beautiful young caucasian female client customer choosing new car, trying checking its options, tire, wheels while male shop assistant helping her to choose it at dealer auto shop
Additional factors affecting costs
Per-mile fuel prices vary widely by type of vehicle, of course, ranging from 12.51 cents per mile for a small sedan to 24.63 cents for a half-ton pickup. Where you live makes a difference, too, with current average prices ranging from a low of $3.46 a gallon in Texas to $5.37 a gallon in California.
AAA evaluated 45 top-selling midpriced vehicles across six categories. While insurance prices saw larger increases in 2022, other ownership costs rose more modestly:
- Depreciation: $3,900 a year ($3,656 in 2021).
- Finance: $712 a year ($658 in 2021).
- Fuel: 17.99 cents per mile (10.72 cents per mile in 2021).
- Insurance: $1,588 a year ($1,342 in 2021).
- License, registration and taxes: $675 a year ($669 in 2021).
- Maintenance, repair and tires: 9.68 cents per mile (9.55 cents per mile in 2021).
The average Manufacturer's Suggested Retail Price — or MSRP — of a new vehicle is $33,301 in 2022 versus $32,903 in 2021, according to AAA. The study assumed vehicles would be driven roughly 15,000 miles per year and be owned for five years.
How can I save money on new car ownership costs?
Drivers who prefer a new car to a used car can consider switching to an electric vehicle or hybrid vehicle. It would cost approximately $600 per year to charge an electric vehicle, AAA estimates, compared with the $2,100 per year to fill up a gas tank. Of course, electric vehicles can often be expensive, so make sure the fuel savings aren't canceled out by the overall cost of the car.
You can also download a gas app, such as GasBuddy or Upside, to help you find the most affordable gas in your area.
On an overall basis, a small gas-powered sedan has the cheapest ownership costs at 54.56 cents per mile, compared with 60.32 cents for an electric car and 64.61 cents for a hybrid, according to the AAA study. A half-ton pickup tops the list at 86.21 cents per mile.
You can check for cheaper insurance rates, too. A NerdWallet survey from 2017 found that roughly 43% of insured drivers hadn’t shopped for new insurance in at least a year, even though shopping for better deals could’ve yielded savings as high as $400 per year.
5 vehicles that are easy on the wallet
Nissan Versa
Those who can’t stretch all the way to $20,000 but want a new, reliable and fuel-efficient vehicle should consider the 2022 Nissan Versa. Despite its small footprint, the Versa offers excellent passenger space and a roomy trunk. Driving aids like forward collision warning and lane departure warning come standard. Nissan’s Zero Gravity seats are ergonomically friendly, though a few of our editors found they lacked lumbar support.
The Versa feels well built and can even be entertaining to drive — just don’t expect much in the way of acceleration. In addition to a price tag that leaves room for options, Versa buyers will save at the pump with an EPA estimate of 35 mpg combined. (We averaged 41 mpg on our evaluation route.)
Starting price: $16,675
Kia Soul
Want a more practical shape? The 2023 Kia Soul is one of a handful of inexpensive and well-reviewed hatchbacks on sale. With car-like handling and SUV-like interior dimensions, the Soul is broadly appealing. A standard 2.0-liter engine is peppy for around-town driving, though passing maneuvers require some forethought. The continuously variable transmission mimics automatic gear changes, eliminating the usual droning noise. Handling is on par with sportier competitors thanks to balanced steering and controlled body motions.
The Soul’s boxy exterior allows for easy entry and exit, plus generous headroom for passengers. Standard Apple CarPlay and Android Auto are accessed via an easy-to-use touchscreen. The EPA puts its fuel economy at 30 combined mpg, though we only managed 26.8 mpg in our testing.
Starting price: $21,085
Hyundai Venue
The line between a hatchback and SUV can sometimes be faint, and the front-wheel-drive-only Hyundai Venue is caught in between. Though it offers ground clearance comparable to other small SUVs, the Venue lacks all-wheel drive as an option. Still, with a price tag just north of $20,000, the Venue is among the cheapest ways to sneak into the most popular segment.
An 8-inch touchscreen with Apple CarPlay, Android Auto and navigation is standard and easy to operate. Given its micro size, the Venue has impressive passenger and cargo space. Seat and ride comfort is excellent for the segment, and power is adequate. The EPA rates the 2022 Venue at 31 combined mpg, but we averaged 29 mpg in our driving loop.
Starting price: $20,295
Subaru Impreza
Just because affordable sedans are primarily front-wheel-drive doesn’t mean all-wheel drive is unattainable. The 2022 Subaru Impreza is the least expensive way to get the all-weather assurance of all-wheel drive in a sedan or hatchback. With a comfortable, spacious cabin and intuitive technology, the Impreza treats passengers well.
Steering and handling is solid, though lackluster acceleration and a droning CVT bring down the driving experience. Standard driving aids like adaptive cruise control, blind-spot monitoring, and lane keeping assist bundle convenience and confidence. The EPA estimates CVT-equipped Impreza sedans will get 32 mpg in combined city/highway driving. Unfortunately, we struggled to average even 28 mpg.
Starting price: $20,290
Ford Maverick
When hatchback or small SUV practicality isn’t enough, shoppers can turn to small pickups like the Ford Maverick. After falling out of fashion for a while, these light-duty compact trucks are back to offer an affordable alternative for DIY-ers. The Maverick’s clever interior storage and a 4.5-foot bed offer versatility, while a standard hybrid powertrain vaults its EPA estimates to 37 combined mpg.
That’s better mpg than even the most frugal compact sedans, plus you get a rugged pickup style, stellar passenger space and crossover-like maneuverability. Ride quality is a tad choppy, and hard plastic panels can bump uncomfortably against your knees, but the Maverick’s low pricing and utility may help offset the cons. Take note that all 2022 model year Mavericks are sold out, but Ford has started taking orders for 2023 vehicles.
Starting price: $22,490
Note that these inexpensive prices are for the base models, which might not be carried by dealerships in the current market. You might need to plan ahead and order the vehicle if need be.
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The article Buying a New Car? Prepare for Over $10K in Yearly Ownership Costs originally appeared on NerdWallet.
