There may be many car owners where the economics of sharing does not stack up until we have shared autonomous vehicles that have substantially lower user costs (that is, no driver wages, for example). All the while we have a driver in a shared car, the economics are not very attractive for regular car users. This is the dominant travel mode in most cities in Australia, and hence I anticipate that the exercise below reflects a circumstance of many current car owners and users.
Suppose I have bought a car for cash for $60,000 (the cost of a quality car), and let me assume I keep it for 10 years and simplify the annual capital cost (depreciation) as $6000, maintenance costs of $1000 and parking costs of $300, and the car has a residual value of $5000 after 10 years, which is reasonable.
The annual rego, insurance, maintenance, parking and fuel/toll bill is about $5000 a year, giving a total outlay of $11,000 a year. There is also foregone interest by not investing elsewhere; however, the shared vehicle user cost also has an opportunity cost, so it is reasonably financially neutral.
I now sell my car and enter the sharing economy and use Uber. Assume I used to drive my car to work five days a week and use the car on weekends, and that I intend to continue using a car-based model for these same trips.
If I use Uber for the same trips, then assuming each Uber trip is $20 (which is a basic charge and likely to be greater for some trips, even under a driverless scenario); the weekly cost is about $250 or $13,000 annually – $2000 greater than the ownership model. If we assume I use Uber on average five days a week (this could be a mix of weekday and weekend), the annual cost is $9285 which is less than the ownership cost of $11,000. Clearly the comparison depends on the number of trips to be made within the sharing model and whether this might be less than under the private car ownership model.
Regardless of the specific evidence, this simple exercise is a stark reminder that a sharing model may not be financially attractive to many car-centric users. When we consider the view that for many, car ownership is not about cost, this adds another layer of issues to think through in the shared-car society.
What is the sharing deal? Not currently very attractive!
Some other points worth making are:
Food for thought.
David Hensher is a Professor of Management at the University of Sydney Business School and a Founding Director of the Institute for Transport and Logistics Studies. Professor Hensher thanks Michiel Bliemer, Matthew Beck, Chinh Ho, Michael Bell and Behnam Fahimnia for comments and suggestions.
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