“Driving has never cost more”

End to the war on the motorists?  No, driving’s never cost more,” declares Mark King, Money Editor, in The Observer today.  To be fair to King, he doesn’t actually say anything as absurd as that driving has “never cost more” in his article — but newspaper headline writers have never let reality or the actual content of an article get in their way.

Why would a headline writer, having glanced at a boring but reasonable article about saving money, think to write “driving’s never cost more”?  Where did they get that idea from?

Are cars more expensive than ever?

You would guess not: the manufacturing process has become vastly more efficient over the decades.  But it was really difficult to find data on this.  By difficult, I mean Google, Google Scholar, Wikipedia and WolframAlpha all failed to find anything useful with my keywords (thanks perhaps to the hundreds of excellently search engine optimised spam sites), and I’m too lazy to do proper research.  Instead, I pulled out a quick and crude graph of the US consumer price index for new cars compared to that for all items, showing how the cost of purchasing a car has fallen compared to general inflation in the cost of living.  (Obviously there is a plethora of caveats with this data and the contributory factors to the cost of living over here are quite different to the US — if anybody can find a more appropriate data set, please let me know.  Data from the UK for 1997-2009 is given further down the page, and shows a massive fall in the price of a new car even over that short time.)

Is fuel more expensive than ever?

Mark King could have read his own newspaper to find out that, no, fuel is not more expensive than ever.  Fuel prices are high, and Motorists can’t hide from the fact that dwindling resources are ever more difficult and dangerous to harvest.  They’re at the top-end of the post-war range, but not outside of the range that we should be used to:

That must be because oil is getting cheaper, right?  Because everybody knows that fuel tax is always going up.  Actually, as Mark King’s own editor pointed out in October, thanks to repeated freezes in fuel tax to appease the tabloids and roads lobby fuel duty remained 11% down on 1999 rates when inflation was taken into account.

So the price-per-litre is high but not exceptional.  But during all that time, the amount of distance you can get for that litre has been rising as cars get more fuel efficient.  Wikipedia has a graph for average fuel efficiency of car models available in the US.  (Average fuel efficiency of cars on the road, in the UK at least, will be higher and may not follow exactly the same trend, because we purchase more cars at the high end of the fuel efficiency range.)  You may be paying a little bit more each time you fill up, but unless you are driving further, you should have found yourself filling up less frequently over the years.

What about the other costs?

Is it more expensive than ever to pay your “road tax“?  Only if you have a really absurd car.  You could pay £950 in the first year of owning a car that emits over 255 g/km CO2.  But only expensive SUVs and sports cars fall into that category — if you own such a car, you are already rich enough to not notice the tax.  Normal cars fall in the top three or four tax bands, where tax has fallen and owners will pay only a token amount of tax, if they pay anything at all.

I couldn’t find much information on maintenance and insurance costs — though I didn’t try very hard, since these are not a significant proportion of overall costs anyway.  If anybody can find good data, I’ll add these to the post.

One area where “costs” might be rising is in depreciation — the decline in resale value.  People aren’t buying second hand cars so much, for all sorts of reasons — because new cars are so cheap (especially during the scrappage scheme and with all the other government subsidies) to the fact that nobody who buys second hand cars wants an old inefficient SUV.

So driving is more expensive than ever?

Mark King (or his headline writer) could have read his own newspaper to see that the Department for Transport estimate that the cost of driving fell 9% between 1980 and 2007.  Alternatively they could have read the Economist last month, which estimated an even more dramatic fall in the cost of driving — especially compared to the rise in disposable income — even during Labour’s famous “War On The Motorist”:

A lot of things happened in the past 18 months, but it’s not plausible to suggest that this trend has completely reversed.

Why do so many people think driving is more expensive than ever?

I don’t think they do.  Most people who are complaining are trying their luck.  Some of it is recall bias — they just don’t accurately remember how expensive cars and fuel used to be.  Some of it is the fact that the costs which are falling — annual VED and upfront vehicle purchase — are one-off or rare payments that one forgets about, unlike the weekly payment at the petrol pump, even though for most people the cost of the vehicle still makes up the bulk of the cost of driving.  Some of it is the Daily Express, the Taxpayer’s Alliance, and the rest of the roads lobby talking bollocks about the poor hard done by Motorist.  But, really, most of the car users I know are complaining about the costs no more or less than they always have.

What is probably true is that motoring is a painful cost for many people.  But paradoxically, it’s the fall in the cost of motoring that has caused this problem.  During the good times of the 80s, 90s, and early 2000s, more and more people have built themselves into a car dependency.  Car ownership is higher than ever because the cost has been falling for so long.  And so, with everybody owning a car, our houses have moved further from our work places, our village shops and services have closed, and the bus service has been withdrawn.  This in turn pushes more people to buy and run a car, even if they can not really afford to do so and were quite happy living without one until the shops closed.  And when the good times turn bad — when wages are frozen, when office locations are merged, and when redundancies are handed out — you can not simply give up the car.  The world changed.

Driving is not more expensive than ever.  Fuel is not more expensive than ever.  Not even fuel tax is more expensive than ever.  Claims that they are don’t even come close to reflecting reality.  And for most people, the fall in the cost of vehicles is far more significant than the cost of fuel.

Rather, ever more people who can not really afford it have been conned by false promises of the aspirational and “liberating” car lifestyle or forced into car dependency against their will.  And the tabloid media and Motoring lobby want to capture the few who are left.  Our politicians and planners should be liberating poor and rural people from that expensive car dependency, not keeping them captive right on the threshold of what they can afford.

This is a hastily thrown together blog not a scholarly article — if you spot something not quite right, do let me know so that it can be corrected.

16 thoughts on ““Driving has never cost more””

  1. I lived in the US from 2000-2004, driving a VW Passat estate car -which did 35 miles per US (4L) gallon, fuel billed at $1.60/gallon, about 25p/L. It meant I could cycle to work in the rain and feel good, as it meant the skiing would be good, and at the weekend, go skiing for about$15 cost. Sometimes I’d have to put my chains on. In summer, the same car would take bicycles or mountaineering gear.

    Yet the TV was full of adverts implying you needed a proper SUV to do sports like skiing, rock climbing and mountain biking, or maybe a pickup. Yet such vehicles not only cost a lot more (adding to your subprime mortgage), their fuel economy meant that people were paying the same per mile as europeans -and their owners chose to live in sprawling suburbs where you did drive 50 miles each way.

    What the car did in the 1990-2005 timeframe was say “you can afford to get a big mortgage on a big house out of town, commute in”. None of those assumptions were valid.

    1. Cost of servicing should be looked at too. VW charge twice per service for a VW Touareg as they do for a polo; it may be the same for BMW, volvo, etc. The SUVs are not just profitable at point of sale, but at service time. Yet as the vehicles computers become more aware of the car’s use, they can vary the service interval from a basic “once a year” to “when the car thinks it needs it”. Drive your BMW x5 for long distances aggressively, the interval may come down to a few months; leave your polo in the street ant it may stretch to years.

    2. Resale value of vehicles. As longevity has improved, cars dont depreciate as badly as they used to, which lowers cost of owning a new or nearly new car, increases cost of owning something older, as it costs more to acquire

  2. You can’t ignore servicing and insurance any more. Most main dealers sell new cars at wafer-thin margins in the knowledge that they have a captive market for servicing for as long as the warranty lasts. My car is thankfully now out of warranty but the dealer was charging over £100/hour plus VAT – the local guy can do as good a job for £40ph.

    Apparently insurance premiums have risen sharply lately, although that is not as far as I can tell due to increased accident risk – probably the reverse – but because parts for repairs are much more costly. In some models a new windscreen can cost over £3k! You can no longer by bits, but have to buy whole assemblies eg rear lights which even ona small hatchback can cost over £100.

    This doesn’t change the fact that motoring overall has got cheaper year by year, but it does occur to me that manufacturers have skewed the costs profile to suck you in – not unlike a drug pusher who makes his smack cheap until he knows you are addicted.

  3. I’d agree you can’t discount the cost of servicing or insurance. My insurance is around £400 a year, and maintenance probably around a couple of hundred a year. I don’t use the car that much (thinking of getting rid in November) so these add up to the biggest cost for me. The car was only £1000 and I’ll have had it three years when I get rid of it.

    Other then that, good article.

  4. People believe they are being fleeced and believe that fuel is outrageously expensive because someone is saying so. It’s what they want to hear. The alternative (changing behaviour) is definitely *not* something they want to hear.

    I walked to get a lift from a colleague this morning. Virtually every car on the main road into Shrewsbury from the Welsh borders (A458) had a single occupant. When I cycle through town it’s invariably the same.

    “TV was full of adverts implying you needed a proper SUV”

    That’s what adverts are for, and people are gullible. It’s why TV adverts for cars nearly all sell you the happy driver and the empty road ahead – it’s what you want so that you associate the brand with the dream.

  5. Thanks everyone! If anyone knows of any data on insurance and maintenance, I’d like to add it. I couldn’t find anything myself.

    One thing to note with insurance is that it will continue to go up as more people take to illegally driving without it due to the lack of enforcement. Can’t have the police waging War On The Motorist and all that.

  6. I’m torqued by bad government policies increasing the waste of petrol. As a Yank, I’ve noted how cars like a Lotus, Elan or Europa are a fading memory with 1,500 lb weight and 1.6l engines of much less power than modern motorcycle engines. My 1996 Honda Civic was up to 1,800 lbs. Today, Smart offers the only thing in that weight range, and a comperably sized car today, like Mini, is 800 lbs. heavier. Congestion is so bad in the US that drivers shuffle along like a prison chain gang. This promotes driver inattention, distraction, and sales of automatic transmissions! Laws requiring child car seats promote sales of SUVs and minivans that are less back breaking to sort the kids. Extra weight comes from crash regulations, idiot-proofing devices, and likely, weaker/cheaper recycled steel. Bicycles have their place, but motorbikes do too for longer distances. Their vehicle weight overhead is far closer to the bicycle than obese cars. Cost can be better too, although ones in China are so simple that their inefficient combustion products has them banned in cities. Fuel injection works great on motorbikes to improve efficiency and emissions. The US government has placed motor vehicle safety above all, efficient road movement, vehicle construction and cost, and proper functioning of natural selection.

  7. Great post. One of the reasons I think that people fixate on the cost of motoring is the price is going up is that the price of petrol is visible on every forecourt. Unlike other prices which we have only a hazy recollection of (how much is a loaf of bread?) the petrol price is highly visible.

    Also because it is highly visible it is the obvious image for a photo-editor looking to illustrate an inflation story

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