Horrible situation to be in but definitely report.
We are all trying desperately hard to talk my nearly 90 year old Grandma into giving up. She went for an eye test at the hospital and unfortunately the doctor asked her the wrong questions. Instead of saying "do you still drive.", he asked her "how did you get here today.", she told him her sister's husband had driven her there, which was true, so the doctor naively assumed she wasn't driving any more and didn't pursue it further. This was unhelpful, in my view. Like your aunt, she only drives very very short distances and seems to think that's fine.
What terrifies me is that a)she might kill someone, including herself, and b) if she does have a major accident and gets prosecuted for death by dangerous driving then she will still get sent to jail, despite her age and previous good character. I have tried pointing out this latter fact to her and she still won't give up!
A lot of older people view driving as some kind of right, rather than the massive responsibility and burden that it is. It's one of the last things that some elderly people can hang on to as a source of their sense of independence and thus they are fiercely protective of it.
I desperately wish they would introduce compulsory driving re-tests after a certain age. This would also get my 70 year old father with glaucoma off the road. He is also a terrible driver and I'm terrified of him having an accident too.... 😢