Thursday, July 21, 2016

GMGH's Uber Test

Kudos to BFP for writing about this. I've actually been wanting to write about this for a while since my last post when I talked about using Uber and Grab.

Although he correctly points out that a normal low-end sedan car has depreciation of around $10k a year, I am strongly against using that number as a comparison. What about road tax? Insurance? Parking? ERP? Petrol? Maintenance?

While car depreciation could be pushed down to maybe $800 a month, the incidentals that come along with it is $1200 with basic usage. But for the sake for being a conservative, let's say that you manage to get free parking, drive when there is never ERP, have super good insurance rates and your petrol lasts forever. $700 is fair then?

Using ridiculous non-real world numbers, we're looking at minimum monthly spending of $1,500 to own a car, or an annual figure close to $18,000. If we wanted to be realistic, it would be $2,200 a month for ~$26,000 a year, but let's just use these make believe numbers anyway. I give car owners massive advantage because they are going to need it. If we use real world numbers, this argument is case closed.

Personally, my average Uber/Grab ride is $13.60. But let's say we push up the numbers a bit and we throw a conservative average ride to be about $18, we're looking at 1000 rides a year!

And remember, you can take a GrabHitch ride from Tuas to Changi for $15... if you can find a driver. UberPool also exists and they can be pretty cheap.

And that's not even counting all the in-house and credit card promotions that practically just throw money at you and helps to reduce your trip costs.

1000 rides a year.... that's almost 3 rides a day. Throw in the fact that you are not obliged to use Uber/Grab for every single trip, so you can combine your travel expenses with the good ol' BMW (Bus, Walk, MRT) you can expect to have tremendous amounts of savings in the thousands if you choose not to own a car. If you own a car, you've already have sunk costs. Even if you decide to stay in for the day and do nothing, that's $50 (at the very least) that you just burnt by leaving your car in the carpark.

The more I think about it, the less it makes sense (to me) for anyone's whose livelihood does not depend on a car, to actually own a car.

You can argue about social status and conveniences, but when it comes down to the dollars and cents of it, it just doesn't add up.

3 comments:

  1. Its just personal choice...some people is happy with a $4 Chang Cheng "mix rice" but some prefer $6 from Ocean...he/she is willing to spend a little bit more for the extra quality...who know that $4 guy could have spend $10 more on a packet or Marlboro daily which the later can do without :)

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    Replies
    1. Hi Anon,

      I've talked to many, many car owners about this before. The resistance of car owners to give up their convenience is amazing. Funny enough, none of them have ever taken a Uber or Grab before. The only time they take taxis are to the airport. Perhaps it's just the people that I have talked to.

      On a purely financial basis, owning a car is much more expensive than these taxi alternatives. I'm not saying that people who own cars will be unhappy with their decisions. I'm just saying that it is a luxury and I have met people who have happily switched from car ownership to these alternatives and are immensely happy with the results. Tons of money saved, and ironically, more flexibility.

      To each their own. There's nothing wrong with owning and paying more for that convenience, especially if you can afford it. But for people that want to be frugal, it ought to be known to them that car ownership is a luxury and if you want to enjoy that convenience and social prestige, get ready to pay a bomb for it.

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