Buying a car can be a terrible financial decision, one that can set you back for years. And many American households make the same mistake over and over again.
In his landmark book, How to Live Well Without Owning a Car, Chris Balish points out that the cost of buying a car is quite different than the cost of owning one. Many people add up the car payment, insurance and gas, and arrive at a round figure for their annual car cost. The problem with this rough calculation is that it does not take into account things like depreciation, maintenance and repair, financing, parking, accessories, and the other small things that make up half the cost of owning a vehicle. When you wonder at the end of the month where all the money went, look no farther than your driveway
“The gross underestimation of how expensive cars are to own is so widespread it’s a national epidemic,” Balish writes. “This lack of understanding is fueled by an endless barrage of automobile advertising purposely designed to make cars seem more affordable than they really are. Commercials that promise ‘A brand new car for $199 a month! Just $199 a month!’ are so misleading they should be illegal.”
Turn on the TV almost any evening, to any channel, and you won’t wait long for a car commercial. They proliferate especially during sports broadcasts, alongside ads for car insurance and cheap beer. Is it any wonder that drunk driving, despite the public relations campaigns of the last 30 years, remains a national tragedy?
Car companies spend billions of dollars a year convincing us that their product is necessary. According to Business Insider, four of the twelve companies that spent the most on advertising in 2012 were car manufacturers.
General Motors spent $2.15 billion on ads. (Source: AdAge 100 Leading National Advertisers Index). Of this total, $1.3 billion went to television, $185 million to magazines, $143 million to newspapers, $176 million to internet advertising, and $1.3 billion to “other” – a category that presumably encompasses direct mail, billboards, live promotions at public events, and everything else.
Ford spent $2.56 billion on advertising in 2012; Toyota spent $2.09 billion; and Fiat Chrysler spent $1.97 billion. The categorical breakdowns were similar.
According to Kantar US Insights, one of the world’s largest information and consultancy networks, U.S. automakers aired 12.7 million television advertisements in 2012 for an estimated cost of $9.4 billion. That amounts to between $1200 and $1500 in TV advertising for every car sold. Since television accounts for roughly half of all advertising spending on cars, the price of a new car includes between $2400 and $3000 in marketing costs alone.
If we all need cars, why does the industry spend nearly three thousand dollars per unit trying to convince us to buy one?
I’m reminded of the controversy surrounding a lawsuit filed by two young women against McDonald’s for making them obese. Morgan Spurlock briefly addressed this suit, which was eventually dismissed, in his 2004 film Supersize Me. The women were widely ridiculed for blaming their own lack of control on McDonald’s. But was their suit really that farfetched? McDonald’s spends nearly $1 billion annually in advertising. One essayist challenged readers to drive along a commercial strip in any U.S. city, count the number of fast-food restaurants, and then turn around and count the number of places one could buy an apple.
It’s hard to fight obesity when its causes are so relentlessly promoted and dangled in front of us. Cars contribute to the problem. We hit the drive-thru instead of carrying our lunch to work on a bicycle. Can individuals be entirely blamed for this behavior when every advertising outlet encourages it?
Clearly, our car-driven lifestyle is bad for our health. And alternatives are readily available. But the sheer volume of car advertising tends to drown out advocates for change. Have you ever wondered why stories about public transportation seem to get buried in your local newspaper? The advertising inserts in the weekend edition constitute a powerful disincentive. Newspapers all over the country are struggling. Car ads provide a valuable source of revenue.
Owning a car costs twice as much as most people think it does, Balish writes. And car companies invest a lot of money to perpetuate this mass delusion, which adds even more to the cost of the product. The smartest decision an American household can make is to reduce its number of vehicles – down to zero, if possible. The car companies and their advertisers hope most us never figure this out.