Car prices keep climbing to new records, and thanks to abnormally high gas prices the cost of owning a car is skyrocketing as well.
The annual cost of owning a new car has hit $10,738, surpassing $10,000 for the first time ever according to auto club AAA. That’s $894 per month — nearly $90 more than the monthly cost of owning a car in 2021. The 11% bump is also greater than the annual rate of inflation, which came in at 8.5% in July.
AAA’s calculations include 45 models of vehicles across a variety of price ranges and assume a consumer holds onto the car for five years and drives it about 15,000 miles per year.
The main culprit for the big increase in car ownership costs is rising gas prices, AAA says. The company used fuel prices from the first five months of the year to determine costs for drivers. During that time, gas prices climbed from roughly $3.25 per gallon to more than $4.50.
That spike came in the aftermath of what GasBuddy Head of Petroleum Analysis Patrick De Haan recently called a series of “once-in-a-lifetime events including the ongoing Covid-19 pandemic, which caused myriad imbalances, exacerbated by Russia’s war on Ukraine.”
Gas prices peaked above $5 per gallon in June and have since fallen back under $4, but drivers are still facing higher costs in other areas. A recent analysis from auto insurance agency Jerry found that car insurance is the fastest-growing vehicle expense over the past 10 years. Car insurance premiums have risen more than 8% already in 2022, according to Jerry, and have spiked more than 50% since 2012.
Auto brands with big increases in new car prices
The prospect of buying a car in 2022 is also daunting, with prices rising steeply for new and used cars alike. A combination of lingering supply chain issues (especially for microchips) and supply and demand imbalances have pushed up car prices across the board.
The average price of a new car reached an all-time high of $48,182 in July, according to Kelley Blue Book. That’s a 11.9% increase over the same month last year, and it too is significantly higher than the most recent overall inflation rate.
Some kinds of cars have seen much larger increases, and it's not simply because auto manufacturers are raising prices. Due to heightened demand and limited supply, car dealerships have been in a position to routinely charge over the sticker price for vehicles on their lots.
Here are the 10 car brands with the biggest price hikes over the last year, according to Kelley Blue Book:
- Tesla: 20.5%
- Porsche: 18.9%
- Honda: 18.4%
- Jeep: 16.6%
- Mitsubishi: 16.3%
- Acura: 15.6%
- Kia: 14.4%
- Infiniti: 13.7%
- Chrysler: 13.3%
- BMW: 13.1%
Buying a used car is traditionally a smart move that saves you money compared to purchasing new. But that strategy might not hold up in 2022. A recent report showed that nearly all of the most popular 2021 models are selling for more than their new prices on the used car market.