Compared to other popular modes of passenger transportation, especially buses, the automobile

Automobile

An automobile, autocar, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor...

 has a relatively high cost per person-kilometre traveled
.
Nevertheless demand for automobiles remains high and inelastic

Elasticity (economics)

In economics, elasticity is the measurement of how changing one economic variable affects others. For example:* "If I lower the price of my product, how much more will I sell?"* "If I raise the price, how much less will I sell?"...

 in rich nations
, suggesting that its advantages, such as on-demand and door-to-door travel, are highly prized, despite recent increases in fuel costs

Gasoline

Gasoline , or petrol , is a toxic, translucent, petroleum-derived liquid that is primarily used as a fuel in internal combustion engines. It consists mostly of organic compounds obtained by the fractional distillation of petroleum, enhanced with a variety of additives. Some gasolines also contain...

, and not easily substituted by cheaper alternative modes of transport, with the present level and type of auto specific infrastructure in the countries 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 road

Road

A road is a thoroughfare, route, or way on land between two places, which typically has been paved or otherwise improved to allow travel by some conveyance, including a horse, cart, or motor vehicle. Roads consist of one, or sometimes two, roadways each with one or more lanes and also any...

s or fuel stations), can allow highly flexible movement and transportation.

According to the RAC

RAC plc

RAC Limited is a breakdown company in the United Kingdom supplying products and services for motorists. Initially formed as the "Associate Section" of the Royal Automobile Club, it was incorporated as R.A.C. Motoring Services Ltd. in 1978. It was then sold by the members of the Royal Automobile...

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

Salary

A salary is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, rather than on a periodic basis....

; while the RACV

Royal Automobile Club of Victoria

The Royal Automobile Club of Victoria is a motoring club and mutual organisation, providing services such as roadside assistance, vehicle, home and contents insurance, personal and car loans, driving instruction, tourism services and home security products.The RACV runs a lifestyle club known as...

 suggests roughly AUD10,000 per year, compared to AUD26,000 median income among all Australian adults or AUD66,000 median income among all Australian households. This situation is reflected in most other Western nations. For the average car owner, depreciation

Depreciation

Depreciation refers to two very different but related concepts:# the decrease in value of assets , and# the allocation of the cost of assets to periods in which the assets are used ....

 constitutes about half the cost of running a car . The typical motorist underestimates this fixed cost

Fixed cost

In economics, fixed costs are business expenses that are not dependent on the level of goods or services produced by the business. They tend to be time-related, such as salaries or rents being paid per month, and are often referred to as overhead costs...

 by big margin, or even ignores it altogether, according to a survey by the RAC

.

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
  Depreciation
  Depreciation refers to two very different but related concepts:# the decrease in value of assets , and# the allocation of the cost of assets to periods in which the assets are used ....
  
   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
  Economies of scale
  Economies of scale, in microeconomics, refers to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit...
  
  .
• 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 lane
  High-occupancy vehicle lane
  In transportation engineering and transportation planning, a high-occupancy vehicle lane is a lane reserved for vehicles with a driver and one or more passengers...
  
  s try to address this issue.

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

• Depreciation
  Depreciation
  Depreciation refers to two very different but related concepts:# the decrease in value of assets , and# the allocation of the cost of assets to periods in which the assets are used ....
  
  
• Income lost due to capital not being invested. See the opportunity cost below for a generic alternative.
• Fuel (including fuel tax
  Fuel tax
  A fuel tax is an excise tax imposed on the sale of fuel. In most countries the fuel tax is imposed on fuels which are intended for transportation...
  
  )
• Repairs
• Maintenance, regular
• Maintenance, for car longevity
  Car longevity
  Car longevity is of interest to many car owners and concerns several things: maximum service life in either miles or time , relationship of components to this lifespan, identification of factors that might afford control in extending the lifespan. Barring an accidental end to the lifespan, a car...
  
  
• Financing
  Interest
  Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds....
  
  
• Insurance
  Vehicle insurance
  Vehicle insurance is insurance purchased for cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial protection against physical damage and/or bodily injury resulting from traffic collisions and against liability that could also arise therefrom...
  
  
• Parking
  Parking
  Parking is the act of stopping a vehicle and leaving it unoccupied for more than a brief time. Parking on one or both sides of a road is commonly permitted, though often with restrictions...
  
  
• Tolls on Roads
  Toll road
  A toll road is a privately or publicly built road for which a driver pays a toll for use. Structures for which tolls are charged include toll bridges and toll tunnels. Non-toll roads are financed using other sources of revenue, most typically fuel tax or general tax funds...
  
  , Bridges
  Toll bridge
  A toll bridge is a bridge over which traffic may pass upon payment of a toll, or fee.- History :The practice of collecting tolls on bridges probably harks back to the days of ferry crossings where people paid a fee to be ferried across stretches of water. As boats became impractical to carry large...
  
   and Tunnels
  Toll tunnel
  A toll tunnel is a special road tunnel whose construction and/or maintenance costs are in part recouped through a toll charged for passing through it. In some instances, tolls have been removed after retirement of the toll revenue bonds issued to raise funds for construction and/or operation of the...
  
  
• Vehicle tax
  Vehicle excise duty
  Vehicle Excise Duty is a vehicle road use tax levied as an excise duty which must be paid for most types of vehicle which are to be used on the public roads in the United Kingdom...
  
  
• Vehicle inspection
  Vehicle inspection
  Vehicle inspection is a procedure mandated by national or subnational governments in many countries, in which a vehicle is inspected to ensure that it conforms to regulations governing safety, emissions, or both. Inspection can be required at various times, e.g., periodically or on transfer of...
  
  
• Registration
  Vehicle registration plate
  A vehicle registration plate is a metal or plastic plate attached to a motor vehicle or trailer for official identification purposes. The registration identifier is a numeric or alphanumeric code that uniquely identifies the vehicle within the issuing region's database...
  
  
• Car Washes
  Car wash
  A car wash or auto wash is a facility used to clean the exterior and, in some cases, the interior of motor vehicles.- Categories :...
  
  
• Accessories
• Opportunity cost
  Opportunity cost
  Opportunity cost is the cost of any activity measured in terms of the value of the best alternative that is not chosen . It is the sacrifice related to the second best choice available to someone, or group, who has picked among several mutually exclusive choices. The opportunity cost is also the...
  
  
• Part replacement, including:
  • Tire replacement
    Tire
    A tire or tyre is a ring-shaped covering that fits around a wheel rim to protect it and enable better vehicle performance by providing a flexible cushion that absorbs shock while keeping the wheel in close contact with the ground...
    
    
  • Brake Pad Replacement
  • Battery Replacement
  • Light Replacement
  • Filters (Cabin Air and Motor Oil)
  • Fluid Replacement (Wind shield washer, Motor Oil
    Motor oil
    Motor oil or engine oil is an oil used for lubrication of various internal combustion engines. The main function is to lubricate moving parts; it also cleans, inhibits corrosion, improves sealing, and cools the engine by carrying heat away from moving parts.Motor oils are derived from...
    
    , Antifreeze
    Antifreeze
    Antifreeze is a freeze preventive used in internal combustion engines and other heat transfer applications, such as HVAC chillers and solar water heaters....
    
    , Power Steering
    Hydraulic fluid
    Hydraulic fluids, also called hydraulic liquids, are the medium by which power is transferred in hydraulic machinery. Common hydraulic fluids are based on mineral oil or water...
    
    )

In the UK Despite rising oil prices, car travel has steadily become cheaper over the past five decades. According to the Department for Transport

Department for Transport

In the United Kingdom, the Department for Transport is the government department responsible for the English transport network and a limited number of transport matters in Scotland, Wales and Northern Ireland which are not devolved...

, the real cost of running a car has dropped by 9% between 1980 and 2007.

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% are fixed cost

Fixed cost

In economics, fixed costs are business expenses that are not dependent on the level of goods or services produced by the business. They tend to be time-related, such as salaries or rents being paid per month, and are often referred to as overhead costs...

s (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

Car longevity

Car longevity is of interest to many car owners and concerns several things: maximum service life in either miles or time , relationship of components to this lifespan, identification of factors that might afford control in extending the lifespan. Barring an accidental end to the lifespan, a car...

. Many automobiles, particularly taxis, have achieved very high-mileage (miles driven) status, indicating that maintenance which can extend the car service life may reduce the overall running cost.

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

Effects of the automobile on societies

Over the course of the 20th century, the automobile rapidly developed from an expensive toy for the rich into the de facto standard for passenger transport in most developed countries. In developing countries, the effects of the automobile have lagged, but are emulating the impacts of developed...

, 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

Carsharing

Car sharing or Carsharing is a model of car rental where people rent cars for short periods of time, often by the hour. They are attractive to customers who make only occasional use of a vehicle, as well as others who would like occasional access to a vehicle of a different type than they use...

 one or more cars between many people reduces the fixed costs per person and limits extraneous vehicles; the use of fleet vehicles

Fleet vehicles

Fleet vehicles are groups of motor vehicles owned or leased by a business or government agency, rather than by an individual or family. Typical examples are vehicles operated by car rental companies, taxicab companies, public utilities, public bus companies, and police departments...

 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

Land use

Land use is the human use of land. Land use involves the management and modification of natural environment or wilderness into built environment such as fields, pastures, and settlements. It has also been defined as "the arrangements, activities and inputs people undertake in a certain land cover...

, 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

Road pricing

Road pricing is an economic concept regarding the various direct charges applied for the use of roads. The road charges includes fuel taxes, licence fees, parking taxes, tolls, and congestion charges, including those which may vary by time of day, by the specific road, or by the specific vehicle...

), or, in the absence of a price mechanism, in an shortage

Economic shortage

Economic shortage is a term describing a disparity between the amount demanded for a product or service and the amount supplied in a market. Specifically, a shortage occurs when there is excess demand; therefore, it is the opposite of a surplus....

 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
  Automaker
  The automotive industry designs, develops, manufactures, markets, and sells motor vehicles, and is one of the world's most important economic sectors by revenue....
  
   includes production statistics
• Effects of the automobile on societies
  Effects of the automobile on societies
  Over the course of the 20th century, the automobile rapidly developed from an expensive toy for the rich into the de facto standard for passenger transport in most developed countries. In developing countries, the effects of the automobile have lagged, but are emulating the impacts of developed...
  
  
• In town, without my car!
• An itemised example that includes income lost due to initial capital not being invested