This is what you'd save if you sold your car and used Uber instead

This might make you want to ditch your car right now!

As we all know, the cost of owning a car in South Africa can be crippling to our bank accounts. Fuel price hikes, repair and service bills, not to mention the costs involved when buying a car in the first place, are all amounts that add up.

In fact last month after realising that I’d spent over R20 000 in repairs alone, I contemplated selling my own car and using public transport instead, before any more costs came about thanks to my my liability car.

The Uber ride sharing app means people are enjoying being able to get to and from their destinations affordably, quickly and conveniently. We’ve enjoyed knowing that we can have that extra drink when out with friends and not have to worry about the dangers of drinking and driving.

Yesterday, (5 December 2016) BusinessTech.co.za reported that a new financial service start-up called ‘MyTreasury.co.za‘ had ‘crunched the numbers on whether it is cheaper to own a car or rely on taxi-app Uber to get you around on a daily basis.’

The results: “If you drive less than 50km a day in South Africa, using Uber will save you money,” says Michael Kransdorff, chief economist and co-founder of MyTreasury.co.za

Does it make financial sense to ditch your car?

Well, according to MyTreasury.co.za if insurance, parking fees, maintenance, licencing, tolls and fines (to name a few) costs are considered, then the average driver spends about R111 000 a year on his/her car.

We have based our calculations on a Toyota Corolla, the most common car used by UberX driver-partners (of course if you drive a more expensive car, the costs of ownership will be even higher). The Toyota Corolla 1.8 Exclusive sells for R300 900.

Assuming that you replace your car in fairly conservative five year intervals, we calculate the car’s depreciation and financing costs at R61 000 per year. This takes into account that you able to finance the car over 5 years at prime and sell it at the average market price.”

MyTreasury.co.za reports that the cost of taking an UberX is R7.50/km + 75cents a minute.

“Any sound financial analysis doesn’t only consider what you spend but also takes into account what you gain (opportunity benefits)

What are the benefits of not being stuck behind the wheel? As an Uber rider, you’re freed up to make calls, send WhatsApps and finally clear out your inbox. We calculate this to be about R2.50 a kilometre.

We’ve assigned a numerical value to this time by considering the hourly rate of a R320 000 annual salary. That comes to R150 per hour. Let’s be conservative and assume only half your commute time is productive. The rest of the time is spent gazing wistfully out the window or chatting about your kids to the driver (you can’t put a price on that).

Also read: Hop in an Uber for free this December

An average South African driver would save 485 hours a year using Uber. That’s a very significant 40 hours per month.”

Other benefits of taking an Uber were also mentioned, including the ability to free up your time to organise your life while checking emails and messages during your Uber trip.

How much money could you have saved by now? 

MyTreasury.co.za found that based on the examples and numbers used you would have saved R14 000 a year if you’d gotten rid of your car and used Uber instead.

The real winners are those who live close to work. To put that in context, if you’re a Capetonian who lives on the Atlantic Seaboard and works in the the City Bowl, you’re driving less than 10km from home to work and back each day. ForJoburgers, someone who lives in Fourways and commutes to Sandton, would drive about 30 km to work and back. For these commuters, Ubering would translate into even bigger savings.

So if your daily commute is below 50 km, you might just want to stop wasting time behind the wheel and start saving money by switching to Uber.”

MyTreasury.co.za notes that:

1. The petrol price is currently R12.79 a litre in Gauteng. We estimate that the average fuel consumption of the Corolla in traffic conditions is 7 km per litre. Thus the average cost of petrol is thus R1.83 per kilometer.  The Road Traffic Management Corporation estimates that South African car drivers drive on average 14 575 km per year. Assuming drivers are operating in urban traffic conditions, we estimate an average speed of 30 km per hour, which results in R27 000 spent on petrol a year.

2. The breakeven number of kilometres is calculated using the following formula: breakeven km =  fixed cost of car ownership / (variable cost of Ubering – variable cost car ownership)

Source: BizCommunity & MyTreasury