Lifetime Cost Of Small Car $689,000; Society Subsidizes This Ownership With $275,000

Cars can be convenient, but they are also incredibly costly, both to owners and society in general. New academic research has calculated that the lifetime cost of a small car—such as an Opel Corsa—is about $689,000, of which society pays $275,000. (A Mercedes GLC costs $1+m over an owner’s lifetime.)

The research focused on Germany, but lead author Stefan Gössling told me the guiding principles work for other countries, too. Writing in Ecological Economics, Gössling stated that “the car is one of the most expensive household consumer goods, yet there is a limited understanding of its private and social cost per vehicle-km, year, or lifetime of driving.”

Motorists, he added, underestimate the total private costs of car ownership, “while policymakers and planners underestimate social costs.”

Cars are expensive because of their high ticket price and depreciation and the additional costs incurred by insurance, repairs, and fuel purchases. Mass motoring’s social costs—known to transport wonks as negative externalities—include carbon emissions from burning petrol and diesel, congestion, noise, deaths and injuries from crashes, road damage, and costs to health systems from sloth.

Other subsidies, such as the copious provision of free off-street car parking, are often mandated in building codes. America’s 250 million cars are oversupplied with an estimated 2 billion parking spots (think Wal-Mart at Christmas) yet spend 95% of their time going nowhere.

Gössling based his cost calculations on an individual driving 15,000 kilometers per year over 50 years. Previous studies using different parameters have reached similar conclusions. In his 2007 book, Deep Economy, environmental author and activist Bill McKibben concluded: “Households can save as much as $750,000 over a lifetime if the bus system works well enough to enable people not to buy a second car.”

And “Mr. Money Mustache”—real name Pete Adeney and who blogs to 350,000 regular readers, advising them how they can retire when young and yet still live comfortably—has stated that a typical American couple who commute to work in separate cars and who spend $19 per day in direct driving and car ownership costs would have paid $125,000 each after ten years.

Living closer to work and bicycling there would land the couple a cool $250,000.

Cars suck

Cars suck more cash than most people imagine. On an average income, half of a working week goes on paying for the costs associated with running an automobile, calculated philosopher Ivan Illich in his 1974 book Energy and Equity.

“The typical American male devotes more than 1,600 hours a year to his car,” wrote Illich.

“He spends four of his sixteen waking hours on the road or gathering his resources for it.”

And working out the labor required to buy and fuel the car to travel 7,500 miles equated to an average speed of less than five miles per hour, said Illich.

Wealth

Counting the total and actual cost of a more-expensive-than-understood form of transport is a calculation that can hurt. The bruise was first poked in the 1850s by American essayist Henry David Thoreau who urged citizens to think about the real costs of railroads via the labor used to build them.

“We do not ride on the railroad; it rides upon us,” he explained in his simple-living book, Walden.

More recently, Adam Ozimek, chief economist at Upwork, tweeted that mass-market car ownership doesn’t make economic sense.

“Spending $40,000 on a car seems like the kind of thing to me that, intuitively, you do when you have like a couple million in wealth and make $400,000 a year,” he wrote.

“But absolutely normal people do it all the time! Blows me away.”

Gössling—a German academic working for the business school at Linnaeus University in Sweden—is also staggered by the acceptance that costly car ownership is considered normal, even for low earners.

Yes, much of the built environment entrenches car use, but, famously, many people drive pitifully short journeys when it would be just as easy—and certainly cheaper and healthier—to walk.

Getting people out of cars isn’t something that most politicians want to broach, Gössling told me.

“It’s a transport taboo; you can’t touch it politically because you’ll get burnt.”

A good case in point is road pricing. The U.K. parliament’s transport committee tweeted last night that “it’s time for an honest conversation on motoring taxes” and, in a meaty new report, suggested that the time is right for pay-per-mile motoring.

Cue “war on motoring” slurs from shock-jocks. It’s an emotive topic. In 2007, 1.8 million U.K. motorists signed a petition against road pricing, fearing the cost of motoring would rise.

To head off such arguments, the transport committee’s report stressed that road pricing wouldn’t be used as a mechanism for reducing miles driven. Rather, MPs soothed, most motorists would end up paying the “same or less than they do currently.”

Who picks up the shortfall? We all do. Society pays in the form of motoring subsidies, which is unfair for those who don’t drive.

“One in five households in Germany doesn’t have a car,” points out Gössling, “yet all are subsidizing car travel.”

“For someone earning a lot of money, none of this is that relevant,” said Gössling.

“Where the difference is, is for those on low incomes, because for them [paying huge sums over a lifetime for car use] can really hurt.”

Instead, he argued, countries and cities should be designed so that “people can be mobile without a car.”

However, he warned, “car manufacturers are very anxious about people getting ideas about not owning cars.”

“In our research, we’re not saying you should start taking away cars from people, we’re just saying it’s probably more prudent, economically, to invest in those infrastructures that are less costly—such as for active mobility—and where people will make a switch voluntarily.”

“Cycling is growing fast in Germany,” volunteered Gössling.

“It wasn’t forced on people, it’s what people want. People want to be healthier. Many studies show how active travel is not just physically healthy; it’s also beneficial for mental health. And cycling is ideal for cities; it’s often much faster than driving.”

“Change can come quickly,” he said.

And the change could be hastened by a better understanding of the total costs of motoring, especially for those who can ill afford such profligacy.

“Most lower-income and many moderate-income households are harmed overall by policies that favor automobile travel over more affordable and resource-efficient modes,” concludes Gössling’s study.

“Such policies force many households to own more vehicles than they can afford, and imposes large external costs, particularly on people who rely on walking, bicycling and public transit.”