Economics of automobile ownership

Compared to other popular modes of passenger transportation, the car has a relatively high cost per person-distance traveled. The income elasticity for cars ranges from very elastic in poor countries, to inelastic in rich nations. The advantages of car usage include and door-to-door travel, and are 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 car are several including congestion and effects related to emissions.

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. Because public transportations are not as well omnipresent and normally don't run at certain day periods, they might not be an option. Car allows a certain freedom of movement, that other means of transport do not. Another private benefit car owners pay, is comfort. The car allows the transportation of the driver (and passengers) from a certain point A, to another point B, within an acclimatized and protected interior.

According to the RAC 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 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 constitutes about half the cost of running a car. The typical motorist underestimates this fixed cost 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 costs of running a car can be broken down as follows (in no particular order):

In the UK 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. This development is in part due to more cost effective manufacturing technologies, and in part due to engines becoming more fuel-efficient.

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