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Step out of the car: a look at the perils of car ownership

January 13th, 2017

2016 marked the fourth straight year Canadians purchased a record number of new vehicles. Approximately 1.95 million cars rolled out of dealership floors last year, suggesting the allure of vehicle ownership remains in top gear for a large contingent of the populace. 

But as car ownership chugs along, on the other side of the divide is a growing notion that a new era of transportation is on the horizon – that may make car ownership obsolete.

Burgeoning car sharing services in every city, digital transportation networks like Uber and even the imminence of self-driving cars are raising the question: is vehicle ownership worth the cost of investment?

Let’s do some cost breakdown analysis and see what’s most beneficial to your bank account.  

Caring about car sharing

There are now multiple car sharing services in every Canadian city, with companies like car2go, Evo, Zipcar, and Modo leading the pack. According to the Globe and Mail, these companies boasted a combined 336,000 members with a fleet of over 5,000 vehicles, as of 2015, and those numbers have surely grown since.

So does that mean more people are giving up on ownership as a status symbol in favour of car sharing’s cost savings and convenience?

Over at ModernAdvisor, they’ve conveniently calculated the costs for using Zipcar and car2go versus owning a car. In terms of savings, it’s a slam dunk for car sharing, assuming you don’t make long daily commutes.

After initial signup fees ($35), car sharing charges by the minute or hour, depending on the company. Driving for an hour a day might set you back $10.

Not only do you avoid car payments, insurance ($1,600/year), fuel charges ($1.34L and rising), maintenance like oil changes ($65) or repairs, but you will even get some free parking depending on what city you are in. The author concludes she will save up to $4,000 a year!

The only factor that can’t be quantified is convenience. Will there always be a car2go available when you need one? What about when you want to hit the road with some friends? Ask yourself if that convenience is worth the hefty price tag that comes with ownership.

Uber-savings

Without a doubt Uber and other online taxiing services have disrupted the way we think about urban transportation. Its convenience and attractive price point have led to an Uber proliferation in Canadian cities where it has achieved, albeit some would say demanded, a municipal green light. 

Uber is likely here to stay and giving reason to abandon the idea of car ownership. To commute from St. Clair Ave and Dufferin St. to Yonge and Dundas Square in downtown Toronto, the cost is going to be around $30/day for a round trip, using uberestimates.com. Even if you did this for 50 weeks of the year, you’re looking at a yearly cost of $7,500. Add in a couple rental car road trips and you’re still well under the conservative average cost of owning a compact car at $9,500 per year, according to CAA.

And with Uber, you’re not paying for parking, which is a huge savings for those working in urban centres.

How soon for self-driving cars?

It seems like almost every day we hear about some new development leading to an imminent arrival of autonomous cars. Several of the largest automakers, including Audi, Hyundai, and Nissan, have pegged 2020 as the year they expect to roll out a self-driving car for the masses.

With this kind of tech race, you can only assume it will arrive sooner rather than later. And it makes you wonder: is purchasing a brand new car ahead of a massive disruptive technology a smart financial investment?

New cars depreciate on an average of 19% in their first year and continue to steadily decline as the odometer climbs. If eco-friendly self-driving cars become all the rage, that could depreciate today’s polluting, gas-guzzlers much quicker. One thing’s for sure, autonomous cars will change everything, so you better buckle up.