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Owning a new car costs more than ever

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Posted at 6:56 PM, Aug 12, 2022
and last updated 2022-08-12 21:00:05-04

COLORADO SPRINGS, Colorado — It's more expensive than ever to own a new car according to the latest study by AAA which finds that American car buyers will spend an average of $10,728 a year on their vehicles. Colorado drivers face even higher costs at an average of $11,451 per year.

The association takes the average sale price of 45 popular models and then adds common expenses like fuel, maintenance, insurance, taxes, depreciation, and financing charges as part of its calculation.

"Everything is more expensive," said Skyler McKinley, Regional Director of Public Affairs for AAA Colorado. "Insurance is more expensive, maintenance is more expensive, but the number one driver this year has been fuel costs which of course have hit historic highs."

The data take into account regional differences in costs in each state such as the price of gas, new vehicle taxes, and registration fees. McKinley explained that the variable driving up costs the most in Colorado is insurance.

"Because we get so much hail and that hail can do so much damage, of course, that increases claims on new automobiles, used cars, even things like windshields, all of that factors in," he said.

Tim Jackson, President of the Colorado Auto Dealers Association points out that Colorado also leads the nation in auto thefts which contributes to higher insurance risk.

Jackson turned to data gathered by J.D. Power and Associates and found that the national average price of a new car sold immediately before the pandemic was roughly $36,000.

"The average new car prices in Q1 of this year, and Q2 of this year, in fact, the first half of the year, was up to $44,000," Jackson said.

He said the order banks at auto manufacturers remain at historically high levels. However, the global computer chip shortage and other supply chain issues have wiped out dealer inventories. It's rare to find a "new" car on the lot these days.

"Dealers are out of cars on inventory, so they've got orders to refill their lots all simultaneously new car customers have some of those same cars on order with their name on it," Jackson said.

The low inventory of new cars and record prices for used cars have led to some unusual buying behavior.

"It's not uncommon for somebody to try to buy that and then flip it. In other words, sell it the next day through Caravana, through CarMax, through AutoTrader, or some other platform," Jackson said.

McKinley said manufacturers prohibit dealers from charging above MSRP on their new vehicles. However, many used cars are selling at prices that are higher than the list price of a new vehicle.

So, McKinley encourages new car buyers to do their homework. He suggests going to the bank first to get financing before shopping, and then consider buying online directly from the manufacturer.

"If you can order online and have it shipped to a dealer you know you're paying a fair rate."

AAA used the data from the cost of ownership study to create an online cost calculator. It empowers consumers to compare new vehicles by looking at the total cost of ownership.

Click here to visit the AAA Driving Costs Calculator
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