ORLANDO, Fla. — While average vehicle maintenance and repair costs rose nearly 9% over last year, new-car financing really is what contributed to a spike in vehicle ownership costs in 2019, according to research by AAA Inc.
Finance costs on new car purchases jumped 24% in 2019, according to AAA, pushing the average annual cost of vehicle ownership to $9,282, or $773.50 a month.
That is the highest cost associated with new vehicle ownership since AAA began tracking expenses in 1950, according to the motorist association.
"Finance costs accounted for more than 40% of the total increase in average vehicle ownership costs," John Nielsen, managing director for automotive engineering and repair, said.
"AAA found finance charges rose more sharply in the last 12 months than any major expense associated with owning a vehicle."
The spike in finance charges — which rose nearly $200 — was fueled by rising federal interest rates and higher vehicle prices. In addition, 72-month car loans have become increasingly common so that car buyers are paying more for a longer period of time.
Long-term loans offer lower monthly car payments, but they ultimately cost the consumer more, AAA said, noting that, on average, every 12 months added to the life of a loan adds nearly $1,000 in finance charges.
AAA's "Your Driving Costs" report reviews nine categories of vehicles, consisting of 45 models, to determine the average annual operating and ownership costs of each. AAA focuses on top-selling, mid-priced models and compares them across six expense categories: fuel prices; maintenance/repair/tire costs; insurance rates; license/registration/taxes; depreciation; and finance charges.
Annual average costs increased in each category.
Of all costs, depreciation, a measure of how quickly a car loses value, remains the single biggest cost of ownership, accounting for 36% of the average annual cost.
Depreciation costs averaged $3,334 a year, up 1.4% from last year. In 2018, depreciation rose 3.7%. In two vehicle classes this year — small and medium sedans — depreciation costs actually declined.
Other study findings include:
- Average maintenance and repair costs climbed 8.9% to 8.94 cents per mile, compared with 2018. The increase was fueled by the growing complexity of vehicle systems and an updated methodology for calculating repair costs;
- Electric vehicles had the lowest maintenance and repair costs — 6.6 cents per mile — while medium-sized SUVs had the highest at 9.6 cents per mile;
- Average fuel cost rose 5% to 11.6 cents per mile, driven by gasoline prices, which are up 15.6 cents per gallon over the timeframe covered by the study. Electricity prices for EV charging also rose 0.1 cent per kilowatt-hour (0.08%), but the market share of the electric vehicles in the study (0.48%) makes the effect of this increase on the overall average fuel cost negligible, AAA said. Fuel costs vary widely by vehicle type, ranging from a low of 3.65 cents per mile for electric vehicles, to 15.67 cents per mile for pickup trucks; and
- The cost of licenses, registration fees and taxes increased 1.9% to $753 per year.
Average annual costs by new vehicle category (based on 15,000 miles driven annually) are: small sedan ($7,114); hybrid ($7,736); electric ($8,320); small SUV ($8,394); medium sedan ($8,643); medium SUV ($10,265); large sedan ($10,403); and pickup truck ($10,839).