Owning a car is often a financial burden — but in 2025, drivers are finally catching a break. According to AAA’s 2025 Your Driving Costs analysis, the total cost of owning and operating a new vehicle this year is $11,577 — or roughly $965 per month — down $719 from 2024.
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Here’s a closer look at why car owners are getting a break in their budgets.
Why Car Ownership Is Cheaper in 2025
To determine the total annual costs of owning a new car, AAA looks at a number of factors, including the cost of fuel, maintenance and repair costs, tire costs, insurance rates, license and registration fees, taxes, depreciation and finance charges.
Several of these factors have decreased over the past year, but reduced depreciation had the largest impact on cost changes from 2024 to 2025, according to Austin Shivers, lead automotive engineer at AAA.
“Depreciation is the largest cost component for new vehicles, so changes in this area have the biggest potential impact,” he said. “Just behind depreciation in impact, fuel is typically the second-largest cost component, and gasoline prices fell significantly from 2024 to 2025.”
This year’s study found that cars are now losing an average of $4,334 in value per year compared to $4,680 annually in 2024. In addition, the average fuel cost dropped to 13.00 cents per mile, a 12.8% decrease from last year.
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The Smartest Way To Cut Your Car Expenses
Although car ownership costs are down, $11,577 is still a significant expense for the average new car — and it’s even more for certain vehicle types. For example, the average annual cost of driving a gas-powered medium SUV is $12,584, and that cost shoots up to $14,781 for a gas-powered pickup truck.
“The biggest thing you can do to save on car ownership costs is not to buy more car than you need,” Shivers said. “The cost difference between types of vehicles can be significant. Doing this can save money in every cost category, from insurance to taxes to fuel.”
Choosing a smaller, more efficient vehicle can lead to thousands in annual savings.
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This article originally appeared on GOBankingRates.com: Car Ownership Costs Just Dropped — Here’s What’s Behind the $719 Decline
