Gas prices across the nation are up more than $1 per gallon on average compared to last year, but that’s not the end of economic stress on car owners. According to a new AAA “Your Driving Costs” analysis, prices costs to own and operate a vehicle are higher than last year.
While AAA noted that it implemented methodology changes (including integrating electric vehicle costs and hybrids into standard vehicle categories) that differentiate this analysis from its 2025 analysis. Still, the auto club’s research showed that the average annual cost to own and operate a new vehicle is $12,863. Last year, its estimate was $11,577. That difference comes out to around $107 every month.
“This reflects continued increases from fuel prices, depreciation, and finance charges,” said AAA.
At the time the study was conducted, regular-grade gasoline used by nearly all YDC vehicles averaged $4.152 per gallon and electricity for home EV charging averaged 18.0 cents per kilowatt hour. Compared to last year, gas prices were up 31.8% and electricity rose 7.8%.
Since President Donald Trump announced in February that the U.S. had joined Israel to attack Iran, the conflict has contributed to high gas prices here at home. As of Wednesday, average national gas prices were more than $4.30 per gallon, AAA data showed. In California, some gas stations were charging nearly $10 per gallon, according to Bloomberg.
Electric vehicle (EV) owners saw some savings compared to those with gas-powered vehicles, AAA said “vehicle type and purchase price both have a significant effect on depreciation – the difference between the purchase price and the resale value – for EV shoppers.” It said EV medium sedans have about twice the depreciation of gas-powered models and total ownership costs for EVs were 29.1% higher in that category.
In fact, AAA said that gas models offered savings compared to EVs and hybrids “in cost categories affected by purchase price, like finance charges, taxes and fees, and depreciation.” Fuel cost savings from EVs were often outweighed by factors like depreciation.
“Hybrids were the most consistently lower-cost alternative to gas in the comparison categories,” said AAA. “They combined meaningful fuel savings with smaller ownership-cost tradeoffs, costing less annually than gas-powered models in medium sedans, compact SUVs, medium SUVs and pickup trucks.”
Overall, vehicles lost a weighted average value of $4,422 per year, AAA said. Meanwhile, the cost to purchase a car (sales-weighted average MSRP of new vehicles) was $39,376.
“While MSRPs increased slightly on average, incentives, demand and rebates can affect what consumers ultimately pay,” according to AAA. “The actual purchase price is used to calculate finance costs and depreciation.”
Kelley Blue Book said earlier this month that the average transaction price (ATP) for a new vehicle in the U.S moved back above $50,000 this August. It noted that it was the first time this year that ATP surpassed $50,000 (up 1.9% compared to last August). Furthermore, it said that “Prices increased across each of the five highest-volume vehicle segments, and the most affordable segments increased more than average, pushing the industry-wide ATP higher.”
“New-vehicle price inflation is real, but automotive price increases have been moderate in recent years and remain below the long-term average of roughly 3%. At the same time, many American households are under significant financial pressure, which is steering more shoppers toward lower price points,” said Erin Keating, an executive analyst at Cox Automotive. “The continued strong growth of Subcompact SUVs highlights how important affordability remains in today's market.”
This week, Kelley Blue Book also reported that the average used car in America was listed for $27,239 in August. That’s the highest price for used cars since December 2022.
“Late summer typically brings flat to slightly lower used car prices. But a limited supply of vehicles has forced prices up this year,” the report said.
Plant closures during the COVID-19 pandemic resulted in around 8.1 million fewer cars being built than expected. Per the Blue Book, that shortage “will ripple through the used-car market for years to come.”
Back in August 2022, there were 2.42 million used cars. Today, there are about 2.13 million, according to the Blue Book.
Heather Long, a chief economist at Navy Federal Credit Union, told CBS News that the “rising cost of car ownership has been the big shocker of the inflation crisis.”
According to CBS, an analysis by the credit union found that car ownership costs have risen 50% since 2020, with repair costs surging an estimated $70% in the last five years, Long said. AAA repair data cited by CBS indicates that costs average around $1,750 for a new car for the first five years of ownership.
“Repair costs can be hundreds of dollars, if not thousands of dollars,” Long explained. “So in many ways, those are the hidden costs.”
Forbes also reported late last month that Trump’s 50% tariff plan on Canadian-built vehicles and auto parts starting in January could significantly impact American car buyers. In particular, it could impact popular models like the Chevrolet Silverado, Toyota RAV4, and Honda CR-V.
“The tariffs could also increase costs for US-assembled cars using Canadian components and drive up used car prices,” said Forbes. “While intended to protect American industry, these tariffs would ultimately burden U.S. motorists, suppliers, and dealers, making everyday vehicles more expensive. Negotiations are ongoing, but the threat is real for American buyers.”
Still, many Americans will need to buy a car in the coming months and years. AAA has some recommendations for keeping costs down. These include: creating a monthly and annual budget that includes ownership and operating costs; keeping vehicle price, finance rate, and trade-in value as separate negotiations and getting pre-approved by a financial institution, such as a bank, credit union or AAA, before discussing financing with the dealer.
