Car prices and the cost of owning a car both hit new highs
Car prices continue to reach new highs and, thanks to abnormally high gasoline prices, the cost of own a car also soars.
The annual cost of owning a new car has reached $10,738, surpassing $10,000 for the first time, according to the AAA auto club. That’s $894 a month, nearly $90 more than the monthly cost of owning a car in 2021. The 11% rise is also higher than the annual inflation rate, which came in at 8. 5% in July.
AAA’s calculations include 45 vehicle models in a variety of price ranges and assume a consumer keeps the car for five years and drives it about 15,000 miles a year.
The biggest culprit behind the sharp rise in car ownership costs is rising gas prices, according to AAA. The company used fuel prices for the first five months of the year to determine driver costs. Meanwhile, gasoline prices have risen from around $3.25 a gallon to over $4.50.
This spike came on the heels of what Patrick De Haan, head of petroleum analysis at GasBuddy, recently called a series of “unique events, including the ongoing Covid-19 pandemic, which has caused a myriad of imbalances, exacerbated by Russia’s war against Ukraine.”
Gasoline prices peaked at over $5 a gallon in June and have since fallen back below $4, but drivers are still facing higher costs in other areas. A recent analysis by Jerry’s Auto Insurance Agency found auto insurance to be the fastest growing auto expense over the past 10 years. Car insurance premiums have already increased by more than 8% in 2022, according to Jerry, and have increased by more than 50% since 2012.
Automotive Brands with Large New Car Price Increases
The prospect of buying a car in 2022 is also daunting, with prices soaring for both new and used cars. A combination of ongoing supply chain issues (particularly for microchips) and supply-demand imbalances have driven car prices up across the board.
The average price of a new car hit an all-time high of $48,182 in July, according to Kelley Blue Book. That’s an 11.9% increase from the same month last year, and it’s also much higher than the most recent headline inflation rate.
Certain types of cars have seen much larger increases, and it’s not just because automakers are raising their prices. Due to increased demand and limited supply, car dealerships have been able to consistently charge list price for vehicles on their lots.
Here are the 10 car brands with the biggest price increases over the past 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 decision that saves you money compared to buying a new car. But that strategy might not hold up in 2022. A recent report showed that almost all of the most popular 2021 models are selling for more than their new prices in the used car market.
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