Owning a Car vs Ride-Hailing Apps: Which Costs More In Singapore?
Singapore is notorious for having expensive cars. With the average cost of cars hovering around S$106,000 in 2017, cars in Singapore are 4-5x more expensive than cars in the US or Korea. In fact, Singapore’s car price is the highest in the world. This poses an interesting question: is using ride-hailing services like Uber and Grab actually cheaper than owning a car in Singapore? According to the analysis conducted by our team at ValuePenguin, the cost of using Uber every day is quite comparable to owning and driving a car.
Owning a Car = Riding on Grab or Uber = S$15,000 to S$16,000 of Cost Per Year
On average, it costs about S$15,000 to S$16,000 to either drive a car or use ride-sharing services everyday for a year. However, when you take into account other miscellaneous costs like parking & various incentive programs introduced by Grab & Uber, using ride-hailing apps everyday is actually more than 10% cheaper than owning a car for an average consumer in Singapore. Below is a summary of our analysis.
According to a study conducted by the Land Transport Authority of Singapore, an average car drives about 17,500 km per year, which is equivalent to roughly 4 trips of 12km per day. We assumed that an average driver drives a Toyota Corolla Altis 1.6, which is the most popular car in the country. This particular car has a mileage of 6.5 litre/100 km (or 15.4km per liter).
To calculate how much it costs to own this vehicle and drive 17,500 km per year, we accounted for the following main components: purchase price (S$104,995 / 10 years), annual premium of car insurance (S$900, assuming 50% no claims discount), S$600 of annual maintenance cost, S$740 in road tax and S$2,341 of petrol cost. This sums up to about S$15,000 of annual cost for driving your own car. Do note that we don’t account for the impact of cost of car loan or the resale value of your car as these variables can vary dramatically for each individual, but these should largely offset each other. For detailed calculation, please see our guide on the cost of car ownership in Singapore.
To calculate the equivalent cost of using Grab or Uber daily in Singapore, we accounted for the following main components: total base fare, cost per mile and cost per minute of Grab and Uber. We assume 1,460 annual trips, which is about 4 trips per day and 12 km per trip, in line with the private car average. Also, we assume that 1 km takes about 1.2 minutes to travel on average, which translates to roughly 50km per hour of average speed (average is 60km/hr on expressways and 30km/hr on arterial roads). The total summed up to around S$16,000 for both services.
Can You Save More?
While the annual costs seem equivalent on the surface, there are other things that can impact this comparison quite meaningfully. First major item is the impact of parking spaces. Free parking spaces are hard to come by in Singapore, and this expenditure can easily offset most of the S$1,000 of difference between the two costs we calculated above. For example, paying S$3 per day for 5 days a week can easily cost you S$750 in one year.
Secondly, we assumed that you are using UberX and GrabCar, two companies’ basic services for single riders. If you decide to use their car-pooling services instead, you can save another 30% or more, though your rides could last a bit longer.
Lastly, we can also look at how savings from credit cards can impact our analysis. For instance, there are many petrol credit cards that can help you save 20% or more on your petrol expenses, as well as cashback credit cards that can help you save significantly on your Grab & Uber rides. For instance, Citi Cashback Card and Standard Chartered credit cards are offering up to 20% discount on your Uber and Grab rides, while UOB YOLO Card is providing free Grab rides for you on weekends.
No Need to Own A Car Anymore in Singapore
In particular, the impact of these credit cards is actually significant in our comparison of owning a car and using ride-sharing apps. Because cost of petrol adds up to only about S$2,300 to S$2,500 per year for an average person, saving even 25% of that adds up to only S$625. In comparison, saving 20% or more on your Grab and Uber rides can be as high as S$3,000, making the latter meaningfully cheaper than owning a car.
In addition, Grab and Uber provide the additional benefit and comfort of relaxing or being productive during your ride, instead of toiling in the driver seat during your commute. Sure, you have to wait for your ride to arrive sometime, but it’s not much better to walk to and fro the parking lot to get to your own car. Given the lower cost as well as higher convenience involved in using ride-sharing apps, it seems there’s no need for an average Singaporean to own a car anymore.
Editor’s note: In Singapore, there are a ton of different options to choose from. Here are some other ways to save on your daily lives with 20 easy ways to save money in Singapore!
We want to find out how women would prefer to deepen their personal finance knowledge, share with us what you think!