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Car vs Public Transport to Save Money

I’ve just been considering when it’s best to drive and when it’s best to take public transport to save money. My old car (1999 VW Passat) uses 12.8L/100km which at $1.65 per liter means 21.1 cents per km on fuel. A new set of tires costs $900 and assuming that they last 20,000km will cost 4.5 cents per km. A routine service every 10,000Km will cost about $300 so that’s another 3 cents per km. While it’s difficult to estimate the cost per kilometer of replacing parts that wear out, it seems reasonable to assume that over 100,000Km of driving at least $20,000 will be spent on parts and the labor required to install them, this adds another 20 cents per km.

The total then would be 48.6 cents per km. The tax deduction for my car is 70 cents per km of business use, so if my estimates are correct then the tax deductions exceed the marginal costs of running a vehicle (the costs of registration, insurance, and asset depreciation however make the car significantly more expensive than that – see my previous post about the costs of owning a small car for more details [1]). So for business use the marginal cost after tax deductions are counted is probably about 14 cents per km.

Now a 2 hour ride on Melbourne’s public transport costs $2.76 (if you buy a 10 trip ticket). For business use that’s probably the equivalent cost to 20Km of driving. The route I take when driving to the city center is about 8Km, that gets me to the nearest edge of the CBD (Central Business District) and doesn’t count the amount of driving needed to find a place to park. This means the absolute minimum distance I would drive when going to the CBD would be 16Km. The distance I would drive on a return trip to the furthest part of the CBD would be almost exactly 20km. So on a short visit to the central city area I might save money by using my car if it’s a business trip and I tax-deduct the distance driven. A daily ticket for the public transport is equivalent to two 2 hour tickets (if you have a 10 trip ticket then if you use it outside the two hour period it becomes a daily ticket and uses a second credit). If I could park my car for an out of pocket expense of less than $2.76 (while I can tax-deduct private parking it’s so horribly expensive that it would cost at least $5 after deductions are counted) then I could possibly save money by driving. There were some 4 hour public parking spots that cost $2.

So it seems that for a basic trip to the CBD it’s more expensive to use a car than to take a tram when car expenses are tax deductible. For personal use a 5.7km journey would cost as much as a 2 hour ticket for public transport and a 11.4km journey would cost as much as a daily ticket. The fact that public transport is the economical way to travel for such short distances is quite surprising. In the past I had thought of using a tram ticket as an immediate cost while considering a short car drive as costing almost nothing (probably because the expense comes days later for petrol and years later for servicing the car).

Also while there is a lot of media attention recently about petrol prices, it seems that for me at least petrol is still less than half the marginal cost of running a car. Cars are being advertised on the basis of how little fuel they use to save money, but cars that require less service might actually save more money. There are many cars that use less fuel than a VW Passat, and also many cars that are less expensive to repair. It seems that perhaps the imported turbo-Diesel cars which are becoming popular due to their fuel use may actually be more expensive than locally manufactured small cars which have cheap parts.

Update: Changed “Km” to “km” as suggested by Lars Wirzenius.

7 comments to Car vs Public Transport to Save Money

  • Good point. According to my estimates the cost of fuel is about 60% of running costs for me (including insurance, basic maintenance and “consumables” like tyres, but discounting repairs) as I drive not that much. For my time is the prime factor, as I save an hour a day when I drive. I pay extra for it, but time is a commodity that doesn’t come cheap.

    The problem with modern Diesel engines is that they like to go long distance. Short trips with abrupt engine shutdown can kill new engine’s turbocharger in months. Yes, months. This leads to lower performance and efficiency and requires costly repair. In Europe, where Diesel engines in cars have longer history the problem is not widely known. I wonder why people are never told about such basic things when they buy a car?

  • Stavros Giannouris

    Nice analysis. I would like to point however, that the tyres should last for 40000 to 50000 kilometers or three to four years, assuming that the owner treats them well (that is, checking pressures often to prevent running them with lower than the advised pressure — the car also burns more fuel if this is the case)

    It is a tiny fraction of the cost so this should not change the conclusion, but I thought I should point it out.

  • Martin

    There are some issues, that are very individual and therefore difficult to calculate: E.g. the hours of a freelancer might be expensive, e.g. 100€/hr. What if you can save one hour a day using the car, because the bus detours? Or you can save an hour in the bus, because you don’t need to search a car park? And one extra hour, because you can read and/or sleep in the bus. (Not in Buenos Aires…)

  • etbe

    Marcin: Interesting. But surely the car manufacturers could easily solve this. 20 years ago there were after-market devices to keep petrol turbo-charged engines idling for a while after you removed the key, fitting something similar to a turbo-Diesel in the factory should be quite easy.

    Stavros: I guess that depends on the make of the car, the type of tire, and the environment as well as the way that the car is driven. For my VW Passat it seems unlikely that I could get more than 25,000km. The other differences between types of car are probably more significant.

    Martin: I agree about the saving time issue, but I didn’t mention it because as you say it’s difficult to calculate and varies a lot.

    If you own a laptop and there is no serious crime problem in your area then you can do some coding on public transport. In 2001 and 2002 I did a lot of SE Linux coding on Dutch trains.

  • etbe: Such thing makes no sense if you don’t have an automatic transmission. In Europe we don’t use it quite as much as in Australia/USA, because it’s wasting fuel.

    The life cycle of tires depends on (by importance):
    * driving style (aggressive is *very* bad)
    * correct wheel alignment [1] (incorrect leads to premature wear)
    * maintenance of correct pressure (too high or too low is bad)
    * weight of a car and it’s load (obvious)

    Other than weight the type of car in question does not make a notable difference. Even weight plays a rather insignificant role here.

    Inspect your tires.
    If one side, the insides or the outsides of usually both tires on the same axle look different then wheel alignment is to blame. Have it fixed, because it also affects handling and fuel consumption.
    If both the inside and the outside of a given tire is used prematurely the tire pressure is too low. This also affects handling and fuel consumption.
    If the center of a given tire is used more then its sides the tire pressure is too high. This affects handling and greatly increases the risk of aquaplaning [2], but somewhat reduces fuel consumption (albeit at the expense of tires).


  • Chris

    Russell – here’s a link to some data published by the RACV regarding vehicle running costs (they include capital costs and depreciation, but its all itemized).
    For a small car, running costs are around 20c/km (this includes maintenance etc).

    Its hard to measure well, but convenience is another factor in the choice. For public transport you have the ability to read/work (assuming its not overcrowded) while travelling, but the downside is in poorly serviced areas you may have to schedule around the transport timetable rather then when you actually want to be somewhere.

  • I’d rather use public transport than my car because it is cheaper.