One of the costs of vehicle ownership. This 1961 EK Holden is left to rust on a property in Benambra, Victoria, Australia

Compared to other popular modes of passenger transportation, especially buses, the automobile has a relatively high cost per person-kilometre traveled. Nevertheless demand for automobiles remains high and inelastic, suggesting that its advantages, such as on-demand and door-to-door travel, are highly prized, despite recent increases in fuel costs, and not easily substituted by cheaper alternative modes of transport.

Public costs related to the automobile are several; effects related to emissions have received a lot of attention, however the impact of discarded autos is far from well-understood since many are recycled.

Private benefits/costs

There are many benefits to owning an auto, however these will differ, by many factors, in regard to location and culture. One general benefit is availability of use which, when coupled with public support via infrastructure (such as roads or fuel stations), can allow almost unlimited movement and transportation. It is not uncommon in cities with intemperate climates, for an automobile to transport a worker from home to work, with secured and comfortable parking at both locations. These benefits do not come without costs; however, that some owners want to prolong their relationship with an automobile (see car longevity) can be considered as sufficient to show that benefits can outweigh costs.

There are a number of reasons for the high cost of car transport:

• The typical private car spends most of its lifetime idle and for some vehicles, depreciation is a significant proportion of the total cost.
• Compared to bulk-carrying vehicles such as airplanes, buses, and trains, individual vehicles have worse economies of scale.
• Capacity utilisation is low. The average occupancy of automobiles is below 1.5 passengers in most parts of the world. Measures such as High-occupancy vehicle lanes try to address this issue.

According to the RAC the average cost of running a new car in the UK is GBP 5,000 (US$ 9,000) per year, or roughly 1/3 of the average net wage; while the RACV suggests^[1] roughly AUD10,000 per year, compared to AUD26,000 median income among all Australian adults or AUD66,000 median income among all Australian households^[2]. This situation is reflected in most other Western nations.

The costs of running a car can be broken down as follows (in no particular order):

• Depreciation
• Fuel (including fuel tax)
• Repairs
• Maintenance, regular
• Maintenance, for car longevity
• Financing
• Insurance
• Parking
• Vehicle tax
• Roadworthiness Tests
• Registration
• Tire replacement
• Accessories
• Opportunity cost

Despite rising oil prices, the real cost of car travel has dropped steadily over the past five decades, in part due to better manufacturing technologies, and in part due to engines becoming more fuel-efficient.

Of the annual running costs of an automobile for the average person, 70–75%^[3] are fixed costs (with respect to distance travelled): a 10% increase or decrease in usage should result in a 2.5–3% increase or decrease in annual running costs.

Some of the annual running costs of an automobile, which are important in the economics of ownership, concern the service life; a major factor for this deals with the uncertainty of the car lifespan. That many automobiles have achieved very high-mileage (miles driven) status indicates that some type of costs that may be related to efforts to extend longevity may be of potential benefit to the car owner, especially if these efforts prove to be repeatable for normal use and in the normal situation.

Public benefits/costs

The existence of the automobile allows a mechanical support for freedom of choice by allowing transportation at the sole discretion of the occupants, given, of course, that the necessary infrastructure (cost) is in place. Too, an automobile can provide the transportation need of several persons in relative comfort in many types of weather; various sorts of automobiles can give this service to a large number of persons.

The automobile allowed expansion of the inhabitable locations, as civil engineering tamed the infrastructure requirements. Of course, that some of the population filled in an area has the counter experience of another area losing population.

As shown by Ford, the automobile offered up a change in the economic landscape. The efforts to resolve costs that have ensued from the influence of the automobile, such as pollution and fuel costs, will have a similar impact on the economic landscape.

Much effort has gone into identifying and reducing public costs related to the auto.

For instance, providing carpooling lanes to cars with multiple passengers has received attention as it helps reduce traffic. Sharing one or more cars between many people reduces the fixed costs per person and limits extraneous vehicles; the use of fleet vehicles affords savings through joint use of a set of autos by a very large group of persons either for business or pleasure.

Since automobiles demand a high land use, they become increasingly uneconomic with higher population densities. This can either manifest itself in higher costs of driving in densely populated areas (parking fees and road pricing), or, in the absence of a price mechanism, in an shortage in the form of traffic jams.

Public transport, by comparison, becomes increasingly uneconomic with lower population densities. Hence cars tend to dominate in rural and suburban environments, while only fulfilling a secondary role in city center transport.

See also

• Automaker includes production statistics
• Effects of the automobile on societies
• In town, without my car!

References

1. ^ http://www.racv.com.au/wps/wcm/connect/Internet/Primary/my+car/advice+%26+information/car+operating+costs/, accessed 2006-12-01
2. ^ The Household, Income and Labour Dynamics in Australia (HILDA) Survey
3. ^ Based on the breakdown of costs given in the abovementioned RACV study