You have been successfully signed up.

Loading, please wait...

It's only fair to share...Share on FacebookTweet about this on Twitter

May 8th, 2018 by


There are many monetary factors which go into owning a car. It’s downright ridiculous when you come to think of it. For the younger global generation of today, owning a car just isn’t that important anymore. And it’s not about saving the environment either, which is the popular reason going around. It’s mainly because, well, we’ve got Uber now.

If you’re a young professional or a student living in the city, chances are pretty good that you don’t need or can’t afford a car. You’ve got ride sharing, ride hailing, car sharing and public transport. When the latter isn’t on strike, of course. These work out way more affordable for the average person as they make their way around the metropolitan areas. It’s just smart living.

Ah, but you live in South Africa, don’t you? And ride sharing services like Uber aren’t as widely available here yet. Many among us commute from the outer reaches of the city. We face hours and hours of mindless traffic. And then there’s the beloved road trip – there may be no better way to see our beautiful country than by taking your car out onto the highways.

So, car ownership is still an important part of South African life. It may work for some, and not at all for others. CompareGuru spoke to none other than Uber itself, in an attempt to get an answer to that burning question.

Should you ditch your car and just Uber everywhere?

uber to transport patients with new health service 124051 1 - Owning a Car vs. Uber: What's Cheaper?

 

My Treasury / Uber Calculations

Uber isn’t just for trips to the airport or a lift home after a night of drinking anymore. People now make use of the service as their exclusive mode of transport.

Back in December 2016, My Treasury conducted research into whether or not it makes financial sense to get rid of your car and just Uber everywhere instead.

Let’s go a little deeper into that.

But first, here’s what went into the research:

  • Calculations were based on the Toyota Corolla, which is the most common car used by UberX driver-partners;
  • At the time of conducting the research, the Corolla 1.8 Exclusive retailed for R300 900;
  • If you drive a more expensive car, the costs of ownership will naturally be higher.

Car Insurance Comparison2 - Owning a Car vs. Uber: What's Cheaper?

Car Ownership

Let’s assume that a motorist replaces their vehicle every five years or so. South Africans tend to keep their cars a lot longer, but five year intervals are a conservative assumption. With that in mind, the car’s depreciation in value and financing costs are calculated at around R61 000 per year.

Additional costs associated with owning a car include:

  • Insurance – comprehensive cover with minimal excess worked out to about R1,500 per month, or R18,000 per year. This quote was supplied to My Treasury by unknown insurers.
  • Parking Fees – assuming that parking at home and work are both free, other fees in major cities are estimated at R1,560 per year.
  • Cleaning – a car wash once a month at an average of R150, the annual cleaning costs come to R,1800.
  • Licenses, tolls and fines all come to about R2,000 per year, if you drive properly and get all the adult things done on time.
  • Petrol – depending on your driving patterns, but can be worked out to an average of R27,000 per year.

Uber has noted that at the time of the study, the petrol price per litre was a delightful R12.79 in Gauteng. Those good old days.

The average consumption of the Corolla in traffic conditions comes to 7 km per litre. So, the cost of petrol worked out to R1.83 per km.

According to the Road Traffic Management Corporation, South African motorists drive an estimated 14,475 km per year. Assuming that drivers are stuck in urban traffic, My Treasury estimated drivers to be operating at a speed of 30 km per hour. Which is wishful thinking. But regardless, it results in an average of R27,000 spent on petrol per year.

The average cost of car ownership, therefore, worked out to R111,000 per year.

 

Time Consideration

Uber says that although the costs of using their service are variable, a client only pays for what they use. The cost of taking an UberX is R7.50/km + 75c/minute (JHB, PTA) and R7.50/km + 70c/minute (CPT, DBN).

In average urban traffic conditions, the cost per km works out to around R9, which is higher than if you’d be taking your own car. Of course, you need to remember that with Uber, this is the only thing you’re paying for. Any thorough financial analysis considers not only what you spend but also what you gain.

Time is money. So, what are the benefits?

  • By taking an Uber, you’ve got your hands free to use your phone and catch up with emails, messages or the news. Instead of focusing on driving, you’re free to do other things;
  • If one were to assign a numerical value to time, My Treasury took the hourly rate of a R320,000 annual salary. This worked out to R150 per hour. Being conservative, one could assume that only half the commute time is productive;
  • The average SA motorist would save around 485 hours a year by using an Uber – or 40 hours a month.

 

So, Does Uber Work Out Cheaper?

It all depends on how much you drive. Using your own car, the less you drive the higher your cost per km. This is because of the high fixed costs that come with car ownership.

With Uber, your cost per km is constant. The breakeven number of km can be calculated using the following formula:

Breakeven km = Fixed cost of car ownership / (variable cost of Ubering – variable cost of car ownership)

The results determined that if you drive less than 50 km per day, in total, or less than 1,500 km per month, using Uber every day will save you money. If you drive more, however, it’s better to stick with your own car.

joyride happy couple adventure roadtrip wanderlust open road convertable car highway love adventure - Owning a Car vs. Uber: What's Cheaper?

Based on the numbers provided by the Road Traffic Management Corporation, the average South African drives around 40 km per day. If you fall into that bracket, switching to Uber could save you as much as R14 000 per year.

The real winners are those who live close to their work. Uber doesn’t offer discounted rates on long distance journeys, and the driver-partners are city based. The Uber drivers don’t use the Uber app in different cities.  All trips, no matter the destination, are calculated by the base fare, per minute and per km. It would be up to the driver-partner to accept a long distance trip, considering it would be at the driver’s expense. They would then have to return back to the city they operate in.

A long distance trip could really put a hole in your finances, then. In this regard, owning your own car would certainly work in your favour.

SAVE up to 30% on car insurance today! Compare quotes here!

05062017 CTAs 01 10 - Owning a Car vs. Uber: What's Cheaper?

A Little More On Uber

In gathering our information, we spoke to Samantha Allenberg, Communications Manager of Uber Africa, in order to learn a little more about the service.

Firstly, there are a number of different Uber services available in South Africa – which operate in and around five cities. These are Johannesburg, Cape Town, Durban, Port Elizabeth and Pretoria.

  • UberX – Affordable, everyday rides. It is available in all South African cities and carries up to four
  • UberVAN – Affordable SUVs for groups up to six. It is only available in Johannesburg, Pretoria and Cape Town (in CT, they refer to it as UberXL) .
  • UberBLACK – High-end rides with professional drivers. . It is operational in Johannesburg, Pretoria and Cape Town and carries 1 – 4
  • UberASSISTRides that are designed to provide additional assistance for riders with access needs, such as wheelchairs. There are no car seats available. It is only operational in Johannesburg and Cape Town.

Uber’s fare is based on a combination of base fare, trip time and distance travelled. The amount all depends on which service you’re using. This kind of billing, or variations of it, are common pricing models in taxis and other transportation options.

UBERINFO 1 - Owning a Car vs. Uber: What's Cheaper?

“We believe that riders and drivers should have certainty and control around prices so that they can make informed choices about when and how to use Uber,” says Allenberg.  “That’s why we make it easy for riders to obtain a fare estimate upfront, both in the app and on the city website, and provide a complete electronic receipt at the end of every trip.”

Uber clients can see the fare estimate before they request a trip, and receive an electronic receipt with every piece of the fare broken out clearly.

 

Are There Any Final Factors To Consider?

Your fare may increase if you travel to a different destination or make extra stops along the route, or the trip takes much longer than expected.  Keep in mind that traffic, weather, or any factors that extend the distance or duration of your ride can contribute to a difference between your estimated and actual fare.

Fares are not based on the number of passengers, however, the app does have a Split Fare feature, which allows you to divide the trip fare equally between riders.

19062017 CTAs 03 700x205 - Owning a Car vs. Uber: What's Cheaper?