Economic case study: Car sharing versus car ownership
Owning a car is fantastic.
It’s freedom. Freedom to go wherever you want, whenever you want – whether that is to go somewhere for fun, for work or for any other reason. And driving in your own car is nicer and cleaner and usually more convenient than public transportation. Having a car also makes life easier in a number of circumstances like driving your kids around, your parents, getting to work, going on dates, going shopping, and the list goes on.
Owning a car is also responsibility and costly.
Excluding purchasing costs, most of the other costs are comprised of insurance, gas, parking and maintenance. These are both direct monetary costs as well as time costs. Especially for the maintenance. Even if you do not do your own maintenance you still need to take time out to take it somewhere to get it done, even if it is just the minimum, keeping a safe set of tires on the car, always making sure there is enough oil, all the little things that can break, lightbulbs that need to be replaced in the headlight, blinker or brake light.
Short of giving up on civilization and going to live on a remote island, if you are leading an active and involved life you probably still need a car. So, even though you can opt for giving up on car ownership it is virtually impossible to give up on relying on the benefits of using a car occasionally.
Eight years ago, I decided to take the plunge and forego the hassles and costs of being a car owner. I opted to use car sharing.
I live in a city in Switzerland and the yearly costs of owning a medium sized car can be broken down as follows:
| Category | Average Yearly Cost |
|---|---|
| Car Insurance | $690 |
| Engine Tax* | $227 |
| Parking | $1800 (On average about $150 per month for a garage space) |
| Maintenance (tires, oil, etc) | $1000 on average |
| Autoroute vignette** | $40 |
| Monthly gas for filling up | $1200 (assumes $100 per month) |
| TOTAL | $4957 |
Just owning a car will cost you about $5000 to keep it going each year. And if you factor in a monthly loan or leasing cost which would be at a minimum of $300 per month, that brings the total cost to about $8500 a year.
From 2009 to 2016, I have spent a total of $38’142 on car sharing services. That amounts to an average per year of about $5450. That is all inclusive including gas. The way the car sharing service that I use, Mobility, works is that you pay a small price per hour, usually about $2 or $3 depending on category of car that you use. Then you also pay a small price per kilometer ranging from $0.50 to $0.95 also depending on category and size of vehicle. And that is all you pay. You do not pay for gas, it comes out of the price per kilometer. I have also opted to pay an extra $150 per year which gives me a reduction in liability in case of an accident to a maximum of $300.
Car sharing services work well in or near a city. Where I live there are about 40 cars spread over five different parking garages within about a max 10-minute walk from where I live. So, I can usually get a car when I need one.
Looking back, I do not regret my decision at all and am thankful for the peace of mind that I have in not having to worry about all the responsibilities of car maintenance.
*Engine Tax: In Switzerland, you are charged an annual tax depending on the size of your car engine. The price used above is for an engine that is 1595 cubic centimeters and 102 horsepower and the equivalent of 76 kilo-watts.
**Autoroute vignette: Instead of having tolls and tollbooths on the highways in Switzerland, they charge CHF 40 a year for a sticker that must be placed on the windshield and gives you the right to drive on the highway. If you are caught driving on a highway without the annual sticker you will be fined $200. (Author’s opinion: $40 seems a fair and small price to pay for not having toll booths and paying on each highway trip. Just going on a day skiing trip in neighboring France usually costs over $12 on tolls and that is just one day.)
I would like a care sharing service like that one here in México, there is a car rental service, but it's too expensive and it does not work the same way :/
Ah that is too bad. Yes another competitor has launched here too but it has a different model where you pay per minute, but one minute is almost expensive as a taxi or Uber so it does not really make sense.
It looks like a fun party in that car!
It's from one of my favourite shows of all time Seinfeld :D
Great post. I was thinking of investing in a car but will check out car sharing services.
Thanks! It definitely works out for me.
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Thank you.
This is a super-interesting comparison. Thanks for sharing.
I live in a rural area with very limited public transport options and long distances for biking so I'm not sure what my course of action would be if I lived in an urban area such as your city.
The freedom from the responsibilities of ownership sound attractive. I might also consider extensive bike use to cut down on car sharing/renting expenses but I am a car enthusiast so there is a good chance I would still want to own a vehicle of my own despite the less-than-ideal aspects of ownership.
Have you heard of Mr. Money Mustache? He advocates biking as much as possible for it's financial, health and environmental benefits. With the new generation of e-bikes this is even more feasible than ever especially in areas with a good infrastructure of bike paths, parking etc.
Lol, thanks for turning me on to Mr. Money Mustache. Problem with biking in the cities is pollution, the cars ... and the other cyclists! I just checked your steemit page and see you are very into cars, so yes can not imagine you car sharing .. or biking actually :). Thanks for reading and commenting.
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