The cost of owning a vehicle in the U.S. is surging, driven largely by rising gas prices, according to Navy Federal Credit Union.
The details: The financial institution’s Cost of Car Ownership (COCO) Index shows ownership costs have reached a record high.
The COCO Index rose 4.7% in March, 5.5% over the past year, and 47.6% since January 2020.
Gasoline prices jumped 21.2% month over month, while repair and maintenance costs also continued to climb.
What they’re saying: “The Cost of Car Ownership Index soared to a record high in March, underscoring the squeeze so many Americans are facing financially right now,” said Heather Long, chief economist at Navy Federal Credit Union, per a press statement. “The 21% jump in gas prices in March was the largest factor leading to the new all-time high, but maintenance costs, repair costs, and tires were all up around 1% as well during the month.”
Why it matters: Rising ownership costs are putting more pressure on consumer budgets, which can impact affordability and buying decisions, especially as gas prices remain top-of-mind with the conflict still looming in Iran.
Between the lines: The cost of ownership is also being shaped by broader economic pressures, even as some parts of the market are beginning to stabilize, signaling some real opportunity for buyers.
Navy Federal’s COCO Index has risen nearly 48% since 2020, while wages have increased just 31.5% over the same period.
The organization expects limited relief until the Iran conflict eases and the Strait of Hormuz is fully reopened.
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What they’re saying: “Industry trends show that while costs have increased the market is beginning to stabilize,” said Kevin Wince, vice president of consumer lending operations at Navy Federal, per the press statement. “Vehicle inventories are improving, and buyers are seeing more options than in recent years. At the same time, lenders and financial institutions are introducing more flexible solutions designed to meet consumers where they are.”
Bottom line: Rising ownership costs are adding another layer of pressure for car buyers, but they also create opportunities for stores that emphasize affordability, fuel efficiency, and flexible financing options to meet shifting consumer needs.
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