The High Cost of Car Ads

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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.
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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.

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For the Price of a Beer

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The Hampden Town Council will vote this Monday, July 20, on whether to continue to fund Saturday bus service. If they vote no, Saturday runs along the Hampden route will end on August 1. The meeting is at 7 pm in the council chambers of the Hampden Municipal Building.

It will be sad if, on the anniversary of the moon landing, the council takes one giant leap backward for its non car-owning residents. It will also be shortsighted, because public transportation is good for the economy. Reliable bus service can enable a family to give up an extra car, and they will spend a good deal of the money they save at local businesses. As several people pointed out at last week’s public hearing in Bangor, we are having the wrong discussion.

I’ve been to a few of these meetings now. Regular bus rider Andrea Rankin and others commented that it is annoying to have to repeatedly fight proposed cuts in service. The conversation we should be having is how to expand the bus system and make it better. People are starting to discover, even in Maine, that car ownership need not be a de facto requirement for full participation in the community. Others don’t own a car because they can’t afford one. Still others have physical issues that prevent them from driving.

The Community Connector bus system is paid for by a roughly one-third formula of money from fares, local governments, and the federal government. As I’ve pointed out previously in this blog, cars sitting in driveways suck up more tax dollars than buses. Yet public transportation makes a convenient target for those who want to trim town budgets by cutting services they don’t use.

What’s driving the attack on Saturday bus service, though, isn’t class warfare but a petty little grudge match between Bangor and Hampden. According to Hampden councilor Bill Shakespeare, Bangor isn’t paying its fair share. The Hampden bus serves Shaw’s, Hollywood Casino, and Beal College, all within the city limits of Bangor. Many riders on the route never enter Hampden at all. It should be called the South Bangor-Hampden route, and the cost should be shared, Shakespeare said. Local costs of the so-called “VOOT” route, which serves Veazie, Orono and Old Town, are apportioned fairly; why not do the same with the Hampden route?

Shakespeare has a point. But it’s a small point. And to “shut down the run and force the issue,” as Hampden resident Jeremy W. Jones suggested, puts the weight of a disagreement between two municipal governments squarely on the backs of people least able to carry it. What may seem like sound fiscal policy to a guy with two cars in the garage can mean the difference between working and unemployment for someone who relies on the bus. It’s a cruel solution that’s worse than the problem it purports to solve.

I’m not going to weigh in on who should pay for what, but this threat to shut down a vital service to prove a point is emblematic of what’s wrong with our politics, from the local to the national level. Hampden may be paying more than its fair share, but Hampden also owes its existence as a wealthy bedroom community to the proximity of Bangor. The city provides the jobs that enable Hampden residents to earn good salaries, a minuscule portion of which they are asked to kick in for a minimal public transportation system that serves the entire, larger community.

The annual cost to each Hampden taxpayer to maintain Saturday bus service is about the cost of a beer at a local bar. It’s a drop in the bucket for a town with a municipal budget of $6.8 million. Instead of sacrificing a needed service over a territorial squabble and a few dollars per person, maybe we should have a “Bus Riders and Taxpayers Beer Night,” and call it good.

We could do it near the holidays. It would generate all kinds of good will, between bus riders and critics of the bus. It could lead to new ideas on how to improve and grow and streamline the service. We could have it at a bar in Hampden, further stimulating the local economy.

Oh, wait. Are there any bars in Hampden? And will we have to drive to get there?

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Capital Gains

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A recent visit to Washington, D.C. got me thinking about bicycles and government, in that order.

I arrived Sunday morning by bus from Richmond, Virginia, and departed by train that evening, leaving me some time to explore a city I had not visited since the Carter administration. Much had changed. I had never seen the Vietnam Memorial, for instance, and I had never navigated the city without a car. Both buses and trains use Union Station, close to the Capitol and the major tourist attractions. But the first thing I saw when I walked outside was a wall of bicycles.

The day was warm but surprisingly not humid. Many people were out walking, running, or bicycling. Some of the bicycles appeared to be privately owned, but many more belonged to a program called Capital Bikeshare, which makes bicycles available, for short periods of time, to the general public. The system is modeled on one pioneered in Montreal, and was the first of its kind in a major U.S. city, opening in 2010. Since then, similar services have debuted in New York, Boston, and Chicago.

According to the website, Capital Bikeshare provides 3,500 three-gear bicycles at some 350 stations throughout Washington and nearby communities in Maryland and Virginia. It’s a membership-based system you can join for a day, three days, a month, or a year, appealing to tourists, short-term visitors, and regular commuters. Your key enables you to pick up a bike at any “dock” and return it to any other. All rides under 30 minutes are free; trip fees apply thereafter.

The system is not without its flaws, or its detractors, as a brief Internet search reveals. Some destinations are more popular than others, resulting in full docks when one wants to drop off a bike. Sometimes bicycles need to be redistributed by truck. And the whole operation is supported by tax-funded entities, from municipal governments to the Federal Highway Administration and the Virginia Department of Rail and Transportation.

I didn’t use it. Instead, I walked, slowly, past the Capitol and the Garfield Memorial and the Air and Space Museum, down to other end of the Mall and the memorials to Martin Luther King, Franklin Roosevelt, Abraham Lincoln, and the tragedy of Vietnam. Afterwards I wandered past the statue of Albert Einstein and up one of the numbered streets until I found a bar showing multiple baseball games on a single screen. Tired of walking, I located a local bus, which cost a dollar, and rode back to Union Station.

Admittedly, I was only there for a day, a Sunday at that, and these observations should not be mistaken for comprehensive analysis. All I know is that I saw a lot of people happily using the bikes.

Critics contend that that the bicycle-sharing system is costly, and that it is used by a small and affluent slice of the population and not the low-income residents it was designed to help. As I have noted repeatedly, such criticism ignores the public costs of the pervasive car culture. Not only is driving heavily subsidized, until recently it has been encouraged by public policy to the virtual exclusion of every other form of transportation. We don’t expect our roads and parking lots to turn a profit. Nor should we expect it from bicycles and trains.

And it is a legitimate function of government to encourage desirable outcomes. The streets of any city are friendlier when they support more bicycles and fewer cars. The carbon footprint is smaller, the environmental impact less, the air cleaner and easier to breathe, the population healthier. It’s appropriate for our nation’s capital to pave the way for similar efforts in other American communities.

* *

I need to correct an error in last week’s post about bicycling to and from work between Bangor and Orono. I wrote that “paved bike lanes provide a buffer from automobile traffic” along much of the route.

Michele Yade Benoit pointed out that what I referred to as bike lanes are actually paved shoulders, not designated rights-of-way for cyclists. There are no official bicycle lanes in the Bangor area. She is correct. Thanks for reading, Michele, and for being vigilant.

Bangor may never grow large enough to justify an organized bicycle-sharing system like those in Washington or Boston. But a little paint, a little pavement, and a little signage could go a long way, at little cost, toward nudging more commuters toward more responsible transportation alternatives.

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