Is the Future of Car Ownership Cars-as-a-Service?

Will the future of car ownership be defined by cars-as-a-service? This question is particularly relevant for city dwellers and, as technology advances, for those in rural areas as well. In many villages where I reside, the availability of convenient taxi services is limited, but this may change.

Urban dwellers, especially the younger generation, are less likely to own cars due to lifestyle and financial preferences. They can quickly adapt to the concept of 'dialling' up a car through their smartphones. However, individuals with driveways and garages, particularly in the countryside, may take longer to shift to this model, especially as they wait for longer range electric vehicles (EVs).

The Cost of Travel and Convenience

There are varying opinions on how the shift to cars-as-a-service will impact travel costs. For some, the total cost of travel may significantly decrease when considering the convenience and the lower costs associated with car-as-a-service.

However, for those who choose to retain ownership of their vehicles, there are compelling financial reasons. The costs of leasing a new car, including registration, insurance, and maintenance, can be more economical compared to the costs of ride-sharing services. Let’s explore an example:

Uber pricing in the 60 each way, which sums to around $2500 per month for a commute. Ownership through a novated lease for a new V6 Camry, which can cost approximately $180 per week over four years with a 37.5% residual and a mileage limit of 20,000 miles per year. This lease is pre-tax and provides a cost-effective alternative.

Hence, for those with shorter commutes, the traditional ownership model may continue to be more economical and convenient.

The Decline of Mass Vehicle Ownership

There is a growing trend towards the decline of mass vehicle ownership. Services like Uber, Lyft, Turo, Mavic, and Waymo are making it easier and more affordable for people to access vehicles on an ad-hoc basis. Many individuals are already choosing to surrender traditional vehicle ownership in favor of the convenience and savings offered by these services.

Consider the statistics: on average, a car sits unused for 20 hours a day, contributing to a significant amount of wasted space. By opting for a service-driven solution, one can enjoy the same level of convenience without the hassle of maintenance, insurance, and fuel costs. Many see this as a more sustainable and cost-effective option, especially as electric vehicle (EV) sharing becomes more prevalent.

As technology and infrastructure continue to evolve, the future of car ownership is likely to shift towards cars-as-a-service, providing a flexible and efficient alternative to traditional ownership models.