Economics of automobile usage

Compared to other popular modes of passenger transportation, especially buses, the automobile has a relatively high cost per person-kilometre traveled [cite conference
first = Mark
last = Diesendorf
authorlink = Mark Diesendorf
title = The Effect of Land Costs on the Economics of Urban Transportation Systems
booktitle = Proceedings of Third International Conference on Traffic and TransportationStudies (ICTTS2002)
pages = 1422-1429
url = http://www.sustainabilitycentre.com.au/TransportCosts.pdf
accessdate = 15.04.08] .Nevertheless demand for automobiles remains high and inelastic in rich nations [cite journal
last = Dargay
first = Joyce
coauthors = Dermot Gately
date = 1998-12-21
title = Income's effect on car and vehicle ownership, worldwide: 1960–2015
journal = Transportation Research Part A: Policy and Practice
volume = 33
issue = 2
pages = 101-138
publisher = Elsevier Science
doi = 10.1016/S0965-8564(98)00026-3 ] , 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, with the presant level and type of auto specific infrastructure in the contries with high auto usage.

Public costs related to the automobile are several; effects related to emissions have received a lot of attention, however the impact of manufacturing and disposal is less well-understood.

Private benefits/costs

The benefits of using a car 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 highly flexible movement and transportation.

According to the RACcite news
first = Hilary
last = Osborne
title = Cost of running a car 'exceeds £5,000'
url = http://www.guardian.co.uk/money/2006/oct/20/motoring
work = The Guardian
publisher = Guardian Media Group
location = London
date = 2006-10-20 ] motorists in the UK spend an average of GBP 5,000 (US$ 9,000) per year on their car, or roughly 1/3 of the average net wage; while the RACV suggestshttp://www.racv.com.au/wps/wcm/connect/Internet/Primary/my+car/advice+%26+information/car+operating+costs/, accessed 2006-12-01] roughly AUD10,000 per year, compared to AUD26,000 median income among all Australian adults or AUD66,000 median income among all Australian households [The Household, Income and Labour Dynamics in Australia (HILDA) Survey] . This situation is reflected in most other Western nations. For the average car owner, depreciation constitutes about half the cost of running a car . The typical motorist underestimates this fixed cost by big margin, or even ignores is altogether, according to a survey by the RAC [cite news
first = James
last = Meek
title = The slow and the furious
url = http://www.guardian.co.uk/world/2004/dec/20/transport.uk
work = The Guardian
publisher = Guardian Media Group
location = London
date = 2004-12-20 ] .

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.

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
* Tolls on Roads, Bridges and Tunnels
* Vehicle tax
* Vehicle inspection
* Registration
* Car Washes
* Accessories
* Opportunity cost
* Part replacement, including:
** Tire replacement
** Brake Pad Replacement
** Battery Replacement
** Light Replacement
** Filters (Cabin Air and Motor Oil)
** Fluid Replacement (Wind shield washer, Motor Oil, Antifreeze, Power Steering)

In the UK Despite rising oil prices, car travel has steadily become cheaper over the past five decades. According to the Department for Transport, the real cost of running a car has dropped by 9% between 1980 and 2007. [cite news
first = Antony
last = Barnett
title = How to make the countryside sustainable
url = http://www.guardian.co.uk/society/2007/mar/21/5
work = The Guardian
publisher = Guardian Media Group
location = London
date = 2007-03-21 ] This development is in part due to more cost effective 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% [Based on the breakdown of costs given in the above mentioned RACV study] 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 on-demand travel, given, of course, that the necessary infrastructure is in place. This infrastructure represents a monetary cost, but also cost in terms of common assets that are difficult to represent monetarily, such as land use and air pollution.

The automobile allowed a shift in residential locations, as civil engineering grew to handle the infrastructure requirements, allowing the growth of the suburbs.

As shown by Ford, the automobile changed 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.

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.

ee also

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

References