The Rising Costs of Car Ownership: Finding Affordable Options in a Changing Market

Owning a vehicle in today’s economy is becoming increasingly burdensome. The financial commitment extends far beyond the initial sticker price, encompassing fuel, maintenance, insurance, and depreciation, all of which contribute to a significant monthly expense. The dream of hitting the open road is increasingly accompanied by the reality of a hefty bill.

The rising costs are driven by a confluence of factors. According to Kelley Blue Book, new vehicle prices have surged by approximately 25% since early 2020. A recent AAA report from September 2024 reveals that the average cost to own and operate a new vehicle now exceeds $1,000 per month. This figure considers fuel, maintenance, depreciation, and finance charges. That figure is up by $115 from the year before.

Greg Brannon, AAA’s director of automotive research, attributes the escalating expenses to the ripple effects of COVID-19-era supply chain disruptions. These disruptions impacted vehicle production and availability, leading to increased demand and subsequently, higher prices. “COVID and some of the supply shortages during that time really changed many of the dynamics in the car market,” Brannon said. “We’re still seeing the impact.”

Given these economic realities, prospective car buyers are naturally seeking ways to minimize their long-term ownership costs. While there’s no universal answer, several strategies and car models can help alleviate the financial strain.

Maintenance Matters: Brands with Lower Repair Bills

One of the most significant recurring expenses associated with car ownership is maintenance. Identifying vehicles with lower maintenance costs can translate to substantial savings over the lifespan of the car.

CarEdge, an online car marketplace, analyzed maintenance costs for a sample of 175 popular models and 174 luxury models. Their findings underscore the importance of choosing a reliable brand. According to CarEdge, the least expensive vehicles to maintain over a 10-year period included models from brands known for their reliability and affordability.

Conversely, CarEdge’s analysis identified luxury brands such as Bentley, BMW, and Jaguar as having the highest 10-year maintenance costs. Zach Shefska, founder and CEO of CarEdge, emphasizes that “reliable, mass-market brands often deliver more predictable and affordable upkeep, while higher-end or specialized models can lead to substantially larger repair bills over time.” This is something important to note when choosing the right vehicle.

Overall Ownership Costs: The Most Economical Choices

Maintenance is only one piece of the puzzle. A comprehensive analysis of ownership costs considers all factors, including fuel or energy, insurance, depreciation, financing, fees and taxes. Financial technology company Self Financial conducted an analysis using AAA data to compare the total ownership costs of 50 of the bestselling models in the U.S.

The Self Financial study identified a mix of gas-powered, electric, and hybrid vehicles as the most affordable to run. Tesla, Nissan, and Honda emerged as top performers in terms of overall affordability. In contrast, Lexus, Ram, and GMC vehicles were found to be relatively more expensive to operate within the sample.

The five least expensive cars to run per year, according to the Self Financial analysis, showcase the diversity of affordable options:

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The analysis also highlighted the most expensive vehicles to run per year:

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Personalized Calculations: Tailoring Costs to Your Situation

While these analyses provide valuable insights, it’s crucial to remember that ownership costs can vary significantly depending on individual circumstances. As Brannon of AAA points out, factors such as driving habits, location, and electricity rates can all impact the final cost.

For instance, the cost of operating an electric vehicle is heavily influenced by local electricity rates. Drivers in areas with high electricity prices will naturally face higher energy costs compared to those in regions with cheaper power.

To obtain a more accurate estimate of your potential ownership costs, Brannon recommends using personalized calculators. AAA’s “Your Driving Costs Calculator” allows you to input specific details about your driving habits, location, and desired vehicle to generate a more tailored cost projection.

Tips for Finding Affordable Vehicles

When embarking on the car-buying journey, keeping the following considerations in mind can help you identify vehicles that won’t break the bank:

• Prioritize Reliability: Research the reliability ratings of different models and brands. Vehicles with a strong track record of reliability are less likely to require frequent repairs, saving you money in the long run.
• Consider Fuel Efficiency: Fuel costs can represent a significant portion of your overall ownership expenses. Opt for vehicles with good fuel economy or consider electric or hybrid alternatives to reduce your dependence on gasoline.
• Shop Around for Insurance: Insurance rates can vary widely depending on the vehicle, your driving record, and your location. Obtain quotes from multiple insurance providers to find the best rates.
• Factor in Depreciation: Depreciation is the decline in a vehicle’s value over time. Some vehicles depreciate more quickly than others. Research depreciation rates to choose a car that holds its value relatively well.
• Don’t Overlook Maintenance Schedules: Review the maintenance schedules for different models. Vehicles with simpler maintenance requirements tend to have lower long-term costs.
• Explore Used Options: Consider purchasing a used vehicle. Used cars generally have lower purchase prices and may have already absorbed a significant portion of their initial depreciation.

Navigating a Complex Market

The increasing costs of car ownership present a challenge for many consumers. By understanding the factors that contribute to these costs and adopting a strategic approach to car buying, it’s possible to find affordable options that align with your needs and budget. Remember to do your research, consider all the costs associated with ownership, and personalize your calculations to make informed decisions. With careful planning, you can navigate the complexities of the car market and find a vehicle that offers both value and reliability.