Is It Cheaper To Own A Car Than Regularly Use Taxi Services?

by Harish Kumar | 23/11/2019
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What would be cheaper? Owning Your Own Car or using a taxi on a regular basis? We analyse. The answer might surprise you!

Transportation is quite a necessity for all human beings. Nowadays, people can choose between various means of transportation for their travelling purposes – to go to work, marketplace, shops and stores, hospitals, visiting friends and relatives, etc., among others by having their own cars or using public transports. According to the Finance Minister, Nirmala Sitharaman, some studies revealed that our millennials are not willing to commit an EMI for buying a car, preferring instead to take Cabs, or even public transport like Bus, Metro, etc. Regardless of whether this had led to the current market slowdown as theorised by her, there is an undeniable rise in the use of public transport in recent times.

Also Read - Delhi NCR: 15-Year-Old Cars will be Taken Away

The question is, would it be cheaper to own a car than using taxis on a regular basis? To figure that out, we calculate the cost of keeping and running a car in comparison with the amount we spend on using taxi services. We did a little research on how much an average person would have to pay for in order to travel around 50 km per day, 25 days per month for a period of 3 years both by driving himself and taking a cab.

taxi uber yellow rear angle

I. Determine The Cost of Car Ownership

Owing an automobile includes many different kinds of costs, like cost of maintenance, fuel, parking cost, road toll, car insurance, etc. For our calculations, we plug in the price sticker of a new car, details of the car loan, and how much we pay on the running cost. You can tweak the figure as per your expenditure, based on how much you usually spend on insurance, maintenance, registration, etc.

1. Price Of A Used Car:

For example, the price of a good used Maruti Swift in Delhi is around Rs. 3 Lakh.

2. Car Loan

  • Interest rate: 14%

  • Loan Period: 3 Years

  • Loan Amount: Rs 2,70,000

  • Down Payment: Rs 30,000

  • Total insurance cost for 3 years: Rs 30,000

  • Car Maintenance Cost for 3 years: Rs 70,000

  • Parking charges & other miscellaneous costs for 3 years: Rs 50,000

Total Costs: Rs 3,63,359

3. Total Car Maintenance Costs For 3 Years

  • Monthly distance covered: 1,500 kilometres

  • Fuel: Rs 66.11/ per litre

  • Fuel Mileage: 20 km/ litre

  • Monthly running cost: Rs 4,960

  • Total running cost: Rs 1,78,560

Comprehensive Cost of Car Ownership for 3 Years: Rs 6,91,900

Resale value after 3 years: Rs 1,50,000 – Rs 1,75,000 depending on car conditions

Also Read - What are The Best Used Cars with High Mileage in India?

II. Determine The Cost of Using Taxi Services

Let's assume a few parameters:

  • Daily total distance covered: 50 km

  • Number of trips: 2

  • Travelling time of each trip: 50 minutes

  • Number of days using taxi services a month: 25 days

Uber Go Charges in India:

  • Base fare: Rs 52.5 X trip

  • Per-minute: Rs 1,05 X min

  • Per km: Rs 7.8 X distance

Total cost for 2 trips per day: Base fare + Time+ Distance + Toll = Rs 52.5 x 2 + Rs 1.05 x 50 x 2 + Rs 7.8 x 50 + Rs 50 = Rs 650

Total Cost for Using Taxi In 3 Years: Rs 650 x 25 days x 36 months = Rs 5,85,000

Surge Pricing: We assume the price to increase by a factor of 1.5 times during surge.

Rs 650 x 1.5 = Rs 975

Total Cost For Using Taxi In 3 Years With Surge Pricing: Rs 8,77,500

Also Read - Essential Tips For Buying And Owning A Used Honda City

III. Comparing The Cost Of Car Ownership Vs Using Taxi For 3 Years

 Total Cost Of Owning A Car  Rs 6,91,900
 Total Cost Of Using Taxis Regularly  Rs 5,85,000
 Total Cost Of Using Taxis With Surge Pricing  Rs 8,77,500
 Resale Value Of Used Vehicle  Rs 1,50,000

Apparently, driving your own car for your daily errands is cheaper than using a taxi regularly, and by quite a margin too!. Further, owning and driving a car of your liking is more pleasurable than using taxi services, not to mention the status symbol it offers. If you are a bit tight on the budget for your favorite new car, try the used car market instead. There's a high chance you'll find a steal deal there. If you are looking to buy a well-maintained used car in India, is right here for you. Check it out now!

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