The average cost of running a family car fell to €10,386, according to the AA's annual survey of motoring costs, down €207.26 on last year.
The AA said the biggest year-on-year change comes as a result of a 9.75% drop in the average cost of fuel.
Fuel prices have fallen significantly in recent months as a result of reduced global demand during the Covid-19 global outbreak.
The average cost of a litre of petrol fell from 139.5 cent last year to 125.9 cent this month, while diesel fell from 129.9 cent to 117.3 cent.
The AA's director of Consumer Affairs, Conor Faughnan, said that while average insurance costs have dropped, there are plenty of motorists whose particular price has not.
These include groups like returning emigrants and those with claims or other non-standard risks.
The AA has repeated previous calls for the Government and the insurance industry to ramp up insurance reform efforts to aid consumers.
"While the noticeable drop in driving costs is a welcome development for motorists, we cannot expect fuel prices, the drop in which have been central to the overall drop in motoring costs, to stay as low as they currently are forever," Conor Faughnan said.
The AA calculates the annual cost of motoring each year using a holistic figure that includes the obvious things like fuel, insurance and servicing but it also factors in a whole range of other costs.
These include costs like depreciation and interest charges, as well as replacement for components such as tyres over the car's life.
The figure assumes a motorist that buys a new car and retains it for eight years at an average annual mileage of 16,000 kms.
