Ever-Increasing Cost of Driving Limits Personal Mobility: Report

New cars are showcased in the window of a car dealership in New York City, on Oct. 5, 2021. Spencer Platt/Getty Images

Vehicle ownership and personal mobility have become an expensive endeavor in 2022.

The average price of a new car in the United States is now around $48,300, the highest on record. The surge in car prices, combined with large increases in fuel, insurance, and maintenance costs, over the past year have drastically increased the total cost of driving.

American drivers have altered their driving habits or lifestyles this year to cope with high prices at the pump. Various surveys have found that people are driving less, combining errands, doing fewer leisure activities, and postponing vacations.

However, it’s not just high gas prices that make people change habits, according to the Lundberg Letter, a major oil industry newsletter.

“Associated costs including maintenance, insurance, tires, and the car itself have exploded higher,” the newsletter states. “For some motorists, it means reduced gasoline usage. For others, it means not driving at all as the cost of a car is out of reach.”

According to the Lundberg report, new car prices have surged 19 percent since 2019. Prior to then, price increases were hardly noticeable.

Motorists looking for a good deal on used cars have also suffered, as prices jumped 44 percent between August 2020 and early this year. While prices have eased since January, they’re still higher than they were a year ago. Edmunds reported that used car prices averaged $29,300 in July.

Source: Lundberg Survey, Inc.

Other costs are also through the roof.

After briefly falling during the pandemic’s height in 2020, car insurance costs, for example, have risen nearly 9 percent per year, reaching an all-time high in August 2022. And on average nationally, insurance premiums are 30 percent higher compared to 2015, the Lundberg report showed.

The average cost of car insurance in the United States is now around $1,771 for full coverage, according to Bankrate data. As the price of a vehicle increases, so does the auto insurance premium. But that isn’t the only reason why insurance costs are rising.

The costs are high, in part, due to sharp increases in crime throughout the country, particularly vehicle theft.

The number of recorded vehicle thefts increased by 17 percent in 2021 compared to 2019, according to the National Insurance Crime Bureau. And the outlook for this year isn’t promising either, as nearly a quarter-million vehicle thefts were reported in the first three months. So, insurance premiums are expected to grow further.

A similar trend can be seen in the rapidly rising costs of maintenance and repair, as well as the hourly wages of auto mechanics. Now, they’re roughly 9 percent higher than last year and 28 percent higher than they were in 2015, according to the Lundberg report. Annual inflation numbers in August also showed that the prices of tires and vehicle parts climbed 13.7 percent and 12.9 percent, respectively.

Sky-high energy prices have eased this summer. From July to August, gasoline prices declined 10.6 percent, but they’re still up 25.6 percent from the same time a year ago.

Gas prices are displayed at an Exxon gas station in Houston, on July 29, 2022. Brandon Bell/Getty Images

Recently, gas prices have resumed their upward trend, reversing a 98-day decline. The national average price for a gallon of gas rose 7 cents in a week, reaching $3.75 on Sept. 27, AAA data showed.

Although gas prices dropped significantly from June’s record high of $5, they’re still quite high when compared to averages from previous years.

“Between December 2015 and August 2022, the average pump price is up a staggering 94 percent,” the Lundberg report stated. “Through September 9 this year, regular grade has averaged $4.227, 37 percent above 2021’s annual average.”

Driving itself is also becoming more expensive, with various costs such as title, registration, and sales taxes rising across the country.

In addition, the Federal Reserve’s campaign against inflation, which involves boosting interest rates, has created an additional financing burden for car buyers. This year, the central bank has raised its benchmark rate five times, from near zero to a range of 3 percent to 3.125 percent.

The interest-rate increases have had a domino effect on auto loan rates, according to the Lundberg report. A higher interest rate would add $70 to the monthly payment of a five-year $50,000 loan. It would cost $4,200 in interest during the loan’s life, the report stated.