Like car prices, the annual cost of car ownership is also up
Photo Illustration by Stacker // Shutterstock
Like car prices, the annual cost of car ownership is also up
Money, car key, wrench, and car illustration.
Buying a car today can be more expensive than it was in years past, thanks to inflation and supply chain troubles, but owning one is also squeezing Americans’ budgets.
According to Bureau of Labor Statistics data, transportation costs—gas, maintenance, insurance—comprise 16% of typical household spending. And Fitch Ratings found that auto-loan delinquency rates are the highest in almost three decades.
To break down exactly why owning a vehicle is so pricey these days, auto insurer The General crunched BLS data to find out how much the cost of owning a car has increased since 2010, as well as what auto expenses are rising most rapidly. Inflation, high-tech autos, and higher insurance costs are some of the reasons for the ownership price spike.
Consequently, the average monthly cost of owning a car is $1,015 in 2023, a 13.5% increase from 2022, when it was just shy of $900, according to AAA’s Your Driving Costs study.
“We are certainly in the middle of challenging times,” Scott Holeman, spokesman for the Insurance Information Institute, told Stacker.
The General
Insurance costs climb
A line chart showing car-related expenses in the US going up since 2010. Car insurance rates rose especially quickly.
During the early days of the COVID-19 pandemic, the Triple-I estimated auto insurance companies refunded $14 billion to consumers because they didn’t drive as much due to stay-at-home and social distancing guidelines. However, once those recommendations eased, drivers returned to the roads. Whether due to less traffic or changing commuter behaviors, driving became more risky and dangerous as police saw more severe accidents, Holeman said. And the more accidents, the higher insurance premiums go.
In addition, automakers are producing “more oversized, luxurious, and expensive vehicles, loaded with extra features that bump up prices even more,” according to Brittany Moye, a public relations and content manager at AAA. So fixing cars—whether after accidents or for regular maintenance—will cost more.
Canva
More thefts—and more lawyers
Person breaking into car.
Car insurance companies have struggled in the wake of the pandemic. “Auto insurers lost an average of 12 cents on every dollar of premium they collected in 2022—the worst performance in more than 20 years,” according to a survey by business intelligence firm J.D. Power.
This may have partly been because of increased car thefts this year, particularly in Hyundais and Kias. A group of young men, infamously known as the “Kia Boyz,” discovered a few security flaws that made those cars much easier to steal, a phenomenon that has proliferated on TikTok.
“Never before have we seen videos that were watched by millions and millions of people that show how to take a phone charger to steal a car,” Holeman said.
Also adding to rising insurance costs is the fact that more consumers are hiring attorneys to represent them when filing auto insurance claims. That increases the potential for larger payouts, which hits insurance companies’ bottom lines.
“You can’t watch a football game or your favorite program on TV or listen to the radio without hearing ads for attorneys who are urging you that if you don’t like what you’re getting from your insurance company, you can call them, and they’re going to make it right,” Holeman said. It’s just one more way owning a car is getting more complicated—and expensive.
Story editing by Jeff Inglis. Copy editing by Paris Close.
This story originally appeared on The General and was produced and
distributed in partnership with Stacker Studio.
