Analysis finds ride-hailing costlier than vehicle ownership

[rcjordan]

While I think the study is likely to be *highly* biased, given the self-interest of the AAA, but Debbie says that the results are in the right direction.

https://www.chron.com/business/bizfeed/article/Analysis-finds-ride-hailing-costlier-than-vehicle-13171088.php

[ergophobe]

Well obviously... the real efficiencies come when you lose the 70% to 80% of the price that is being paid to the driver. THAT is when it becomes cost effective to not have a car.

[rcjordan]

Again, we have the problem of how to reconcile the huge disparities in vehicle ownership costs around the US.  My state is on the cheaper side. New Jersey   ....not so much.

That said, for people like me who drive 'beaters,' self-insure, and do some of their own vehicle repair & maintenance, no way is a shared vehicle service going to get close.  But for a yuppie (do we use the term 'yuppie' anymore? It's waaaay easier to spell than 'millennial.') who finances a Lexus and rolls the negatve into a new purchase every two years, yeah, it might be a good deal.

[Brad]

In Chicago, buying one parking space can cost between $25,000 to $35,000 depending on location.  So in some places you have to factor that in.

[rcjordan]

>$35000

I'm guessing the price of those goes tits-up when level-4 autonomous vehicles hit the market.

In RC's world, if you live in a place where you have to buy a parking space, then you need to move.

[ergophobe]

finances a Lexus and rolls the negatve into a new purchase every two years

On the ride home from a wedding this weekend, we were waiting in line at the bridge and smelled some bad engine smells and started looking around to figure out if it was coming from us (no, old beater car in front). And noticed just how many fancy new cars there were.

I realized that when we bought that car, we paid a bunch of cash and had a $500 payment for 3 years (1.9% financing). Anyway, I pointed out to Theresa that if we had had car payments this whole time since that payment stopped (2007), and assuming we kept just rolling into a new car and that was true for both cars, that would have added up to about $120,000. At the time it didn't occur to me that we had actually paid half cash and half financed and that we save a lot on insurance by driving old cars that don't need collision insurance etc etc.

So, as I mentioned in the other thread, we paid off our house a week ago. I noted to her that if we had been driving newer cars with a loan on them all this time, we would likely still have at least two years to go on the mortgage. Probably three because of compounding interest effects.

But anyway, looking around, I wondered how many of those people in those fancy cars were wealthy and how many were just deep in debt

[ergophobe]

Also, the AAA study looks at high-mileage drivers. Since so many of the costs of car ownership are fixed, the fewer miles you drive, the more sense it makes to rent or hail when you need a car.

[rcjordan]

Before the last crash, Louise & I were eating at a pricey restaurant and I told her "80% of the people eating here can't afford it." 

> how many were just deep in debt

As it turns out, I was conservative at 80%.  And it's worse for car-buyers because vehicle financing promotes it. See also "Stoplight envy."

[DrCool]

>>the fewer miles you drive, the more sense it makes to rent or hail when you need a car

Since I am working at home now and don't need to drive to the office we are trying to survive on one car. Currently a 2000 Honda Odyssey which will soon become a 2003 Odyssey when my wife's sister and her family move to England.

In a month there has only been one instance where we "needed" the second car but even that was easily worked around. We figured for the couple times a month the issue might come up I can get an Uber or Lyft if necessary. I have thought about getting an old pickup for hauling stuff but even there we have a U-haul place within walking distance and I can get a truck for a couple hours for $20.

I assume at some point we will pick up a second vehicle but we could make the one car thing work if we really needed to.

[rcjordan]

> 2000 Honda Odyssey which will soon become a 2003 Odyssey

So keep the 2000 AND the 2003.  Bring it over here and I'll get some good ol' boys to plasma-cut the top off and we'll make a pickup out of it.  Problem solved.

[DrCool]

>>So keep the 2000

I took it to the mechanic after driving it across the country. I knew the valve cover gasket had a leak in it but when he looked at it he pretty much laughed and said "There is no place this thing is not leaking oil" and wouldn't even give me a quote to fix it. Asked if I wanted the number for the local rescue mission that takes donations of used vehicles to fix and resell.

Might just give it to my nephew who is in school to be a mechanic and see if he wants a project vehicle.

[aaron]

Well obviously... the real efficiencies come when you lose the 70% to 80% of the price that is being paid to the driver. THAT is when it becomes cost effective to not have a car.

A nontrivial portion of what the driver is paid goes toward covering gas, maintenance, insurance, the car's cost & financing the purchase.

Adding a large capital cost to an asset lite business often lowers the valuation of the associated business.

In Chicago, buying one parking space can cost between $25,000 to $35,000 depending on location.  So in some places you have to factor that in.

In some of the true global bubble cities parking can be more than an order of magnitude higher than that. A few months ago someone flipped a spot for a $330k gain after holding it for only 9 months.
https://www.businessinsider.com/hong-kong-world-record-most-expensive-parking-spot-2018-6

Before the last crash, Louise & I were eating at a pricey restaurant and I told her "80% of the people eating here can't afford it." 

> how many were just deep in debt

As it turns out, I was conservative at 80%.  And it's worse for car-buyers because vehicle financing promotes it. See also "Stoplight envy."

Outside of the domestic US market the US automakers are to a large degree break even operations everywhere else except for financial services
https://seekingalpha.com/article/4039723-ford-management-sandbag-2017-projections
And for the financial services stuff, that stuff swings deeply on recessions to where when the tide gets out the automakers can be considered banks which make cars to promote debt.

For some of the used car market there is far more profits in the financing than any other aspect of the sale.

[Travoli]

>for people like me who drive 'beaters,'

That's becoming popular, even in our overheated economy. Vehicles cost more, last longer, etc...

https://wolfstreet.com/2018/08/21/average-age-of-cars-trucks-vehicles-by-household-income-vehicle-type/

[ergophobe]

This is a major factor in bringing up fleet efficiency - all of us geezers hanging onto old cars. If the last passenger-piloted gas-engine car were produced today, it might take 10 years before the majority of cars were self-driving EVs.

[rcjordan]

>>for people like me who drive 'beaters,'

I do keep a 'Sunday-Go-To-Meeting' vehicle with lower miles and better looks because ...Louise really whines about riding in my dirty 'everyday' car. Still relatively cheap, though.

I can't say when I got hooked on beaters, but it really kicked into high gear when I realized I was going to provide cars for 5 kids.  Kids will tear the fenders off a Mercedes just as fast as they'd rip up a Tempo --so mine got used Tempos.  Somewhere around then I developed a depreciation goal of 10 cents per mile for life of the vehicle. I got so I could meet or beat that almost every vehicle up until 2008-ish.  Since then, it's closer to 15 cents.