An analysis by Navy Federal Credit Union found that the total cost of car ownership in the United States has increased 50% since 2020. While rising gasoline prices are a factor, the study identified surges in repair costs, insurance rates, and routine maintenance as the primary drivers of the financial burden on motorists. Heather Long, chief economist at Navy Federal Credit Union, stated that repair costs alone have risen 70% over the last five years.
The increase in ownership expenses coincides with an aging domestic vehicle fleet and higher technical complexity in modern cars. According to the U.S. Department of Transportation, the average age of passenger cars reached 14.5 years in 2025. Long noted that as owners keep vehicles longer, service charges typically increase, while the growing prevalence of electronic sensors and parts makes individual repairs more expensive. Additionally, a reported shortage of mechanics has enabled service providers to increase their rates.
Data from AAA indicates that the average annual cost to own and operate a new vehicle has reached $12,863, which breaks down to approximately $1,071.92 per month. For the first five years of owning a new car, repair costs average approximately $1,750. Insurance costs have also shifted, with LendingTree reporting that the average annual premium for full coverage in 2026 is $2,124, while minimum coverage averages $816 per year.
The impact is felt most acutely by those maintaining older vehicles, as the national fleet age of 14.5 years suggests more frequent and costly mechanical failures. Renters, students, and low-income workers who depend on aging cars face higher financial volatility due to these "hidden costs" described by economists. Furthermore, the 45% increase in gasoline prices since late February—rising to a national average of $4.33 per gallon—adds a recurring weekly expense that compounds the higher fixed costs of insurance and maintenance. These elevated prices at the pump are attributed to market disruptions following the start of the war with Iran.
The knock-on effects extend to the labor market and the broader economy. The shortage of mechanics has created a pricing environment where service centers can set higher labor rates, further increasing the cost of basic mobility. As households spend more on vehicle upkeep, they may have less to spend on other goods and services, potentially cooling consumer demand in other sectors. Looking ahead, the Federal Reserve is expected to announce a rate hike on Wednesday, which could further influence the cost of auto loans. Motorists will continue to face these elevated costs as long as the mechanic shortage persists and energy markets remain impacted by the ongoing conflict.