How much car ownership costs these days

Owning a car in Canada has become significantly more expensive thanks to the surging cost of living and climbing interest rates, putting additional financial pressure on Canadian families.

The average monthly cost of car ownership reached $1,387, or $16,644 annually, as reported by Ratehub.ca, an online financial comparison platform.

The report, which draws on data from various sources including Statistics Canada and AutoTrader, broke down the average cost of car ownership into several components. Canadians now spend approximately $200 monthly on gas, $200 on parking, $111 on car insurance, $79 on vehicle maintenance and about $195 on interest from car payments.

Moreover, the automotive market has seen a steep increase in the cost of vehicles. As of September 2023, the price of new cars has climbed by almost 20 per cent year-over-year, with the average new car price reaching $67,817, according to AutoTrader. Similarly, used car prices have risen by 4.3 per cent, with the average used car now priced at $39,155.

The report suggested that for those residing in major cities and not reliant on personal vehicles, forgoing car ownership could lead to substantial savings.

“For the $1,387 we estimate it costs to own a car, a family of four can get unlimited travel on the TTC for as little as $286 per month,” the report said. “That leaves over $1,000 for Ubers and occasional car rentals.”

The automotive sector’s current predicament is partly due to a supply-chain crisis triggered by a global shortage of semiconductor microchips, essential components that power everything from airbags to key fob remotes. The onset of the COVID-19 pandemic in 2020 saw the auto industry pause production, while chip manufacturers shifted their focus to the booming electronics market for cellphones, TVs, and computers.

Unexpectedly, the auto industry rebounded quicker than chip suppliers could accommodate, driven by consumers eager to avoid public transit and shared rides amidst the pandemic. This mismatch between low supply and high demand has been identified as a significant contributor to the soaring prices of new vehicles.