Drive 12k km a year? Cheaper to call a cab

Aug 9, 2017, 02.36 PM If you will drive your car for less than 12,000 km a year, it is better to hail an Uber or Ola for your rides than own a vehicle. That's because a new study shows that owning a car may not be a feasible proposition if the vehicle clocks less than 12,000 kms per year. Even otherwise, with the rising preference for cabs, aggregator services have doubled their fleet size over the last two years."Given average driving distance of 12,000 km annually for an Indian car, the cost of usage works out to Rs 22km (including fixed and variable costs). A personal car is cheaper only if the distance driven is more than 15,000 km annually ," ratings agency Crisil said. "And with a chauffeur, that distance doubles to 30,000 km," it said. And aggregators such as Uber and Ola are adding vehicles to their fleet at a fast clip. At current pace, about 15% of the total cars sold by 2020 and 30% by 2030 would be utilised by aggregator services and regular cabs, a study by Crisil Research showed. Since cabs will end up utilising their entire lifespan, lesser number of cars will be required on the road, leading to a 20% reduction in car population by 2030, the agency said. Passenger car sales could decline by a compounded annual growth rate of as much as 150 basis points, or 1.5% (100bps = 1 percentage point) through 2030 due to rising preference for cabs from aggregator services, which typically clock more driving miles than personal cars, Crisil stated. Interestingly , the share of personal car in transportation is higher than taxis and three-wheelers despite the higher cost as people are willing to pay for greater convenience. High costs are also not going to deter first-time car buyers. "Consumer surveys have indicated that while a person will likely buy his first car anyway -since it is an aspirational goal -those who are planning to buy a second car would be more likely to defer their purchases," said Binaifer F Jehani, director, Crisil Research. Among the factors driving up passenger preference for cab aggregators is the cost per kilometre. The Crisil Research's study shared with TOI shows the cost of hailing an aggregator cab is Rs 19 per km, compared with Rs 18 for a traditional taxi, and Rs 22 for own car. Many are migrating to cabs for cost and convenience. "The increasing shift towards cab aggregator services will have wide-ranging ramifications. Cab owners tend to use more fuel-efficient cars than personal car users, which means lesser emissions," Jehani said. "Also, since more cars will be on the road for more hours, parking woes could ease to some extent," she said. "A shared aggregator cab is available for as low as Rs 11 per km, and offers the convenience of doorstep pickup, chauffeur, and air conditioning," she stated.