AAA: Average vehicle service and repair cost is nearly $1,475 a year

A vehicle owner driving 15,000 miles a year can expect to pay $1,474.50 in annual maintenance and repair bills, according to AAA's most recent "Your Driving Costs" report, up 1.5 percent from 2022.

A motorist will spend 9.83 cents on maintenance and repairs per year for every mile they drive, up 0.15 cents from 2022, according to AAA.

Data from the long-running report offers finance and insurance professionals and their consumers intelligence on the kind of expenses F&I coverages are meant to hedge against.

AAA's 9.83-cents-per-mile estimate is applicable for the first five years of new-vehicle ownership, according to the auto club. It does not include bills for repairs that would have been reimbursed under a manufacturer's warranty.

The figure includes parts and labor for manufacturer-recommended routine maintenance; the cost of repairs on items that would naturally wear down in those five years, such as brakes; a set of new tires; and the cost of a vehicle service contract. Greg Brannon, AAA director of automotive engineering, has called a service contract a "pretty good proxy" for repair costs.

Motor vehicle parts prices rose 2 percent year over year in August, when the report was released, while maintenance and repair costs grew 12 percent, and the cost of motor vehicle repairs alone increased 17 percent. U.S. prices as a whole, according to the consumer price index, rose 3.7 percent.

Details on rising repair costs can be used to sell consumers F&I coverage, according to F&I trainer and Reahard & Associates national account development manager Rick McCormick.

In a recorded interview played before the Ethical F&I Managers Conference in September, McCormick said giving consumers new information changes minds and intensifies their "urgency of need for coverage." He pointed to a CNBC article about 20 percent growth in motor vehicle repair prices in June as an example.

"This is a game changer," McCormick said. "This will change people's minds."

Electric vehicles carried the cheapest maintenance and repair costs among the categories AAA studied, at 8.12 cents per mile. Hybrids came in second, at 9.09 cents a mile, with a slightly less expensive bill than small sedans, at 9.11 cents. Last year, EVs also offered the lowest service and repair costs, but small sedans edged out hybrids for second place by a penny per mile.

EV maintenance and repair costs are less because there's no need for oil changes or certain "inspections and replacements" required by a gasoline internal combustion engine, according to Brannon. He told Automotive News that EV service contract costs "tend to be on par with their gas vehicle counterparts."

So why are hybrids — which carry that gasoline engine, electric motors and other parts to boot — a better service and repair deal than internal combustion vehicles? AAA credited regenerative braking, found on both hybrids and EVs, which prolongs brake pad life.

"This would be the main contributor to why a hybrid would have lower maintenance costs than its gas-powered counterpart," Brannon said in a statement.

AAA said overall annual new-vehicle ownership costs grew by 14 percent to exceed the $12,000 mark in 2023, reaching $12,182, or $1,015 per month, in a "sharp increase" from $10,728 in 2022, or $894 per month.

Finance charges were a significant part of the increase, growing a "staggering" 90 percent to $1,253 per year, according to AAA. The auto club's calculation uses a five-year loan with 10 percent down charging the national average interest rate.

AAA also estimated that depreciation, which it considers part of the cost of ownership, rose 24 percent to $4,538 a year in 2023. It bases this figure on the expected difference between the new-vehicle purchase price and likely trade-in value after five years and 75,000 miles.