Thursday, November 13, 2014

What does it cost to own a car?

There have been a few good articles recently about the social cost of cars. Here is a good one -- it nicely summaries what many people are unaware of: vehicle registration does not pay for car infrastructure. Cars require a taxpayer subsidy.

People who ride bikes subsidise people who drive cars.

Here, I want to explore something different.

  1. What does car ownership cost its owner?
  2. How much time must the average car owner work to pay for their car?
These questions aren't often asked, so I ran a few numbers in a simple spreadsheet, which can be viewed here.

The cost of car ownership:

A private citizen on a slightly above-average income will spend 2.75 hours per week working to pay for their car. This includes a very small mileage (less than 40 kms/week). As the weekly distance driven increases, so too does the cost, though the cost per distance decreases.

A private citizen on a slightly above-average income will spend 2.75 hours per week working to pay for their car.

I ran the "model" with a heap of [distance travelled] options to explore how much work was required. I estimated several things:
  1. work hours per week
  2. Cost in Australian dollars per kilometer driven
  3. time spent working, per distance. This is measured in hours per 100km per week. This is the time that is worked by the car owner, each week, for each 100/kms they drive.

What I found really interesting is that it is really expensive.

For a person who drives 10000 km per year (just under 200 km per week) they must work nearly 4 hours per week, which equates to more than 2 hours work per 100km per week, for a total cost of $0.44/km driven. Suddenly public transport is looking very cheap indeed. Remember, this is the private cost borne by the car owner, and does not include all of the public costs borne by the Australian taxpayer.

A total cost of $0.44/km driven -- a limo is cheaper!

As you drive less, owning a car makes even less sense. For someone who drives 3000 km per year, the cost is more than $1 per kilometer. You could catch a limo cheaper than that!


Owning a private car does not make economic sense, even with the strong public subsidies that currently exist. Of course, the bottom line is not the only consideration, so I understand that people will want to keep a car, just for security and convenience. However, if you are a household with more than one car, I would strongly encourage you to consider getting rid of one car and exploring other forms of transport. Your wallet, and your country will thank you!

This article was written by Angus Wallace and first appeared at


  1. Hey Angus. Yep, there is a saying: "Driving down the road to debt in an oversized four wheel drive"!

    Actually, you see a lot of expensive cars on the roads these days. What I see is that people are up to their eyeballs in debt with higher purchase agreements too... I reckon it is a way for them to reward themselves. Status cars don't drive that differently from cheaper cars anyway.



  2. Hi Chris,

    I agree with your comment, though this model doesn't consider the cost of the car, just the ongoing expenses. I think halving the cost of the car would reduce the expenses by about 1/8th (ie. not a large effect!)

  3. Hey Angus,

    Fair enough and I agree the ongoing costs of car ownership are massive. Did you get much rain up your way over the weekend? How full are the water tanks going into summer?

    PS: It probably isn't a bad idea to enable comment moderation as you never know when your site may be hit by trolls.

    Cheers. Chris


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