Ride-Hailing vs. Vehicle Ownership

With the ease and accessibility of app-based transportation options, right at our fingertips, you may be one of the many people who’ve considered ride-hailing exclusively versus vehicle ownership.

And as cheap and convenient as those Uber and Lyft rides can be it’s logical for the thought to have crossed your mind. The cost of parking, tolls, vehicle maintenance, gas, the cost of your car itself, insurance… heck that all adds up – right?

Well our friends at The Auto Club of Southern California, aka AAA, have crunched the numbers thoroughly and the final verdict is that owning a car is going to be part of living in the SoCal region for the foreseeable future.  Get the complete details in this iDriveSoCal Podcast.

 

Pretty young woman in open door of a vehicle with a pink mustache, a Lyft, ride-hailing service as part of the iDriveSoCal 140 Podcast banner

***Transcript***

Recording date – September 25, 2018, in Los Angeles, CA

Vehicle Ownership vs. Ride-Hailing

Doug Shupe: Do I want to go with a new vehicle? Do I want to consider, maybe solely relying on another mode of transportation like ride-hailing services? So, that’s really the purpose of what this study was.

We looked at cities like New York, Austin, Texas, also, here in Southern California, we looked at San Diego. All of them was more than double what it would be if you actually owned and operated your own vehicle.

Tom Smith: Alright. Welcome to iDriveSoCal, the podcast all about mobility from the automotive capital of the United States, Southern California. Tom Smith here, and I am joined today, we’re actually at the historic Motor Club of Southern California, aka AAA building, and I’m joined by Doug Shupe, who is the, if I’m going to do your title by memory, Senior Public Affairs Specialist.

Doug Shupe: That is right. You got it.

“…we live in car culture, Southern California, and we love our cars here in Southern California…”

Tom Smith: Nice. So, and it is Motor Club of Southern California, right?

Doug Shupe: The Auto Club of Southern California.

Tom Smith: Auto Club.

Doug Shupe: We’re here at our historic Los Angeles headquarters, at Adams and Figueroa. Been here since the early 1920s.

Tom Smith: Yeah, and we did a number of podcasts together. What was it? A couple of months back? I came to this very same location, and it was under remodel construction then, which is pretty much wrapping up now. I didn’t realize the history of the building. It’s always been…

The Auto Club of Southern California

Doug Shupe: The Auto Club of Southern California. For folks who visit the branch office here at the LA headquarters at Adams and Figueroa, you can see that the history in this building, and the beautiful Saltillo tile, and the fountain we have in the large rotunda.

You drive… you park in this historic courtyard, and it was under construction for a while, but now it’s back up and running. So folks can check that out before they head out for their holiday travels soon, and check out the new digs as we call them.

Tom Smith: For those of you that are like me, that enjoy history, appreciate history, part of the new remodel is pictures all up and down the hallways of, basically, the history of the Auto Club. Obviously, the history of the Auto Club involves the history of the auto, so it’s a pretty neat additive.

“…with all the technology these days, it’s kind of like, well, hey do I really need a car?”

So, come check it out when you get a chance. Most everybody’s a member of the Auto Club anyway, so you’re probably a member if you’re listening to the iDriveSoCal podcast.

Doug Shupe: The Los Angeles branch office is a great place to come and get your maps and get your trip planning and travel planning because you do get to see some of that history right here just close to downtown LA.

Tom Smith: All that aside, Doug and I are going to be talking in this podcast about an interesting study that was just done. They, Motor Club… what was it called? What’s the correct…

Doug Shupe: The AAA Foundation for Traffic Safety.

Tom Smith: No, no, no. The correct…

Doug Shupe: Auto Club of Southern California.

Do You Need to Own a Car?

Tom Smith: Auto Club of Southern California. To me, it’s always AAA because I’m from the Midwest. I’m from the Chicago area, and it was just always AAA. So, Auto Club of Southern California.

I swear, give me about 20, 30 more podcasts together, and I’ll still be getting it wrong. So, but you guys did a cool study about ride-hailing and the cost of exclusively ride-hailing, as opposed to owning a vehicle.

We’re going to talk about that, and then there’s also another study that you guys did as far as the cost of owning a vehicle. So, we’re kind of going combine the two into one versus. Right?

Ride-hailing as a means of transportation versus actually owning a car, because, with all the technology these days, it’s kind of like, well, hey do I really need a car?

“…relying on ride-hailing services as a primary mode of transportation, would cost $20,118.00 – every year.”

Quite honestly, I think I have some friends, not in Los Angeles, but in other cities, that are kind of experimenting with that life. But, they’re in a different stage of their life, too. Right? They’re younger, single, whatever… I wonder if that’s a possibility if you have a family, or when it’s kind of viable. That’s what we’re going to kind of drill down on here.

Doug Shupe: Of course, we live in car culture, Southern California, and we love our cars here in Southern California, and our trucks…

Tom Smith: Way of life.

Doug Shupe: Yeah, it really is. What this study looked at was, what the … more and more Ubers and Lyfts…

Tom Smith: Sure.

Doug Shupe: …and the other modes of transportation that are available. We know that ride-hailing services are becoming more popular and more convenient for a lot of folks.

Convenience Comes at a Cost

What we found at AAA is that they’re not a cost-effective replacement for actually owning a car. According to the AAA Foundation for Traffic Safety, the average driver in an urban area, the only setting in which using these services are practical full-time transportation options.

The average driver goes about 10,841 miles per year. Now, while urban drivers travel fewer miles than those living in smaller towns or rural communities, relying on ride-hailing services as a primary mode of transportation, would cost $20,118.00 each and every year. This equates…

Tom Smith: Okay… go ahead.

Doug Shupe: This equates to more than twice the cost of owning a personal vehicle, even when you’re factoring in the expense of fuel, insurance, parking, and the vehicle itself. Now, that was the national average.

Tom Smith: Okay.

Doug Shupe: More than twenty thousand. Here in the Los Angeles area, it would cost, if you just used the ride-sharing services, it would cost about $17,951.00 each and every year. And that’s…

Tom Smith: Just to ride… 

“This equates to more than twice the cost of owning a personal vehicle…”

You know, I’m just thinking, I lease my cars, and it… mid-level luxury, not a high-level luxury, in both cases, I’m less than half… but, to be fair, I’m just thinking of the lease payment. I’m not thinking of fuel. I’m not thinking of insurance. I’m not thinking of…

Doug Shupe: Parking…

Tom Smith: Parking.

Doug Shupe: …which is a big issue in Los Angeles.

Tom Smith: If you’re doing a lot of driving here in Southern California, you also have to factor in the express lanes, right?

Doug Shupe: Exactly.

Tom Smith: If you’re doing that…

Doug Shupe: Tolls.

Tom Smith: …and that can get pricey.

Your Driving Cost 

Doug Shupe: What we looked at also was every year AAA does a “Your Driving” cost study to kind of let consumers know, This is what you’re paying on average to own and operate a vehicle in the United States.

The 2018 “Your Driving Cost” study found that the average cost to own and operate a new vehicle in 2018 is $8849.00 per year. Now, the figure is calculated based on the cost of fuel and some of those other things we were talking about: maintenance, repairs, insurance, license, registration, taxes.

It even includes the depreciation of the vehicle and loan interest. The study examined 45 top selling 2018 models. So, when you look at that, you can see that it is more cost-effective to own and operate your own vehicle. It really depends. Most people here in Southern California are not using only ride-sharing services.

“…another option that’s convenient to get home if they have had alcohol or even marijuana.”

Tom Smith: Right.

Doug Shupe: They’re mixing it in with the … using their own vehicle, and then occasionally using ride-sharing services.

Tom Smith: I can think in my own personal experience, and I’ve recently shifted lifestyles from my wife and I being single, go out, have fun folks, who are not drinking and driving, we’re Uber-ing or Lyft-ing…

To now, parents with an eleven-month-old at home and never going out and never drinking. Two very different lifestyles.

Since slightly before my son was born, or even before my wife got pregnant, because obviously when she was pregnant if I had a couple of drinks, she would just drive. There would be Uber or Lyft when there was drinking, and the other Uber or Lyft component would be to and from the airport.

Can You Ride-Share Exclusively in SoCal?

Now, the notion of… I don’t know anybody in Los Angeles that has gone so far as to try and Uber or Lyft exclusively. I don’t know if that’s possible in LA. It just, I don’t know, it…

Doug Shupe: There are people who do it in the country, but, you’re right. In Los Angeles …

Tom Smith: The country…

Doug Shupe: We don’t know a lot of people.

Tom Smith: Define the country.

Doug Shupe: The Northeast. You know, we were talking about New York City, Washington, D.C., even Boston. The Northeast. That might be a more viable option.

Tom Smith: Those are still urban areas. Those aren’t necessarily the country. We are not talking about Dubuque, Iowa.

Doug Shupe: Right, but we certainly don’t have the long distances to travel that we have here in Southern California.

You know you brought up a good point, though, when you talked about having that other option, and that’s what ride-sharing service is great for. Giving someone another option that’s convenient to get home if they have had alcohol or even marijuana.

“…we looked at the top 20 major urban areas, and all of them ranged much more than double the cost of actual car ownership!”

Tom Smith: Yeah, marijuana now. Sure.

Doug Shupe: Because, now here it’s, sales recreational…

Tom Smith: And you can get a DUI with marijuana.

Doug Shupe: Absolutely.

Tom Smith: We did a podcast on it. There’s a podcast, iDriveSoCal podcast, that we did with CHP. I’m forgetting the officer’s name. Sorry about that, Officer, but he’s an officer from Sacramento, and you very well can get a DUI with just marijuana. Yeah, no problem.

Increased Options AND Traffic Congestion

Doug Shupe: Traffic safety has been at the core of the Auto Club, you know, since the early 1900s.

Tom Smith: Sure.

Doug Shupe: We certainly, absolutely want people to use every option that they can just get behind the wheel not impaired. Right, and so ride-hailing services are great for that.

What this study really looked at though, we wanted consumers to have information so that they can make a wise choice on when they’re considering a new vehicle. Do I want to go with a new vehicle? Do I want to consider, maybe solely relying on another mode of transportation like ride-hailing services? So, that’s really the purpose of what this study was.

Tom Smith: Out of curiosity, is there any city, any area where it pencils out, where it’s like. Eh, maybe, you’re close?

“…for the majority of people who drive the average number of miles we drive every year, the car is still king.”

Doug Shupe: Yeah, we looked at the top 20 major urban areas, and all of them ranged much more, more than double the cost of actual car ownership.

We looked at cities like New York, more than $21,000.00. Austin, Texas, nearly $19,000.00, solely using ride-sharing services. Also, here in Southern California, we looked at San Diego.

All of them was more than double what it would be if you actually owned and operated your own vehicle.

Tom Smith: Well, it makes sense and the… another podcast that I did actually was it was iDriveSoCal, iDSC100, if you will. It was, talked about the future mobility, and what’s real, and what’s hype.

One of the things that I think is interesting is we have all this technology that’s helping us in the transportation world, in the mobility space, and it’s redefining mobility and whatnot. Whether it’s Uber and Lyft, or the scooters, or whatever else, all this tech, we’re still sitting in ridiculous traffic.

You Probably Still Need a Car

Ride-sharing, van-pooling, whatever. We’re not feeling the impact from a diminishing traffic time spent in traffic congestion, at least as of yet.

Doug Shupe: Even with ride-hailing, you are exactly still sitting on the freeway or still on the surface street.

Tom Smith: Someone is driving me.

Doug Shupe: Exactly. I think it’s important to also mention that for those who travel a very limited number of miles each year, or those maybe who have mobility issues which prevent them from being able to drive their own vehicle, ride-hailing certainly is a very viable and important option to them.

Tom Smith: That’s been there, right? For those of us that, the members of society that have difficulty getting around, their mobility needs have been served by different options for some time.

“Show your car some love. Keep it well maintained.”

Doug Shupe: There have been. Ride-hailing has helped give them that other option, make it a little bit more convenient, kind of on their time-frame for when they want to use it. So, that’s been great, but for the majority of people who drive the average number of miles we drive every year, the car is still king.

It’s going to be more affordable to own and operate that vehicle, so long as you keep your operating costs in check. In certainly, things that you want to do is buy gently used vehicles because depreciation is the single, largest expense for vehicle owners.

Fuel it up responsibly. Avoid wasting money on premium gasoline unless your vehicle specifically requires it. Show your car some love. Keep it well maintained. Spend money on those routine maintenance checks because it’s going to save you money in the end.

And then, also, just slow down. When gas prices are high, small changes in the way you drive certainly do make a big difference.

Buy vs. Lease

Tom Smith: I’ll agree with all of that, and I used to be that type of buyer. I would never buy new. I would buy slightly used, and I would buy. I wouldn’t lease…

However; a handful of years ago, I started leasing. For my daily drivers, I’m never turning back. I love being able to park it anywhere, at the grocery store, or the ballgame or wherever else, and you know what, it winds up getting a ding. Okay, it’s a lease. It’s going back.

Maintenance, a non-issue. It’s under warranty. Everything else, absolutely. Buying versus leasing, that’s a pretty…

Doug Shupe: It depends on your situation.

“I’ve been thinking of buying or leasing…”

Tom Smith: …that’s a pretty intimate thing, though. Some people are very… like you could lay out the facts for somebody, and I’ve done this.

Being in the space that I’m in. Friends or acquaintances, I meet somebody at a party, well like I’ve been thinking of buying or leasing, whatever, and you lay it all out. All of a sudden, it’s just like, I’m not asking you to switch political parties! I’m just saying that it might make sense for you to take this route, but anyway… well, good stuff.

Doug, thank you as always… Oh, I have one question before we wrap this up.

Doug Shupe: Sure.

Vertical Takeoff & Landing / Flying Cars

Tom Smith: You guys were looking at, it’s Uber and Lyft, right? Is there anybody else?

Doug Shupe: There are other ride-sharing services. Yes, there are. Depends on which city you’re in.

Tom Smith: So, Uber has 2 years down here in Los Angeles that they’ve held a conference called Uber Elevate. That conference, have you heard of this?

Doug Shupe: I have.

“…that’s still very new and, in the future… So, stay tuned, basically.”

Tom Smith: You have. Okay. So that conference basically deals with the future of vertical travel, vertical takeoff and landing. Flying cars. Have you guys dipped your toe into the waters of any studies, anything in that universe at all yet?

Doug Shupe: I think that’s still very new and, in the future, and so we just want to help provide drivers out there. Our members, but everybody else who uses our roads, we all share them together, with up-to-date, accurate information, help people make their own decisions.

So with, as stuff comes along, we look at that and see if this is information that’s going to be very helpful, important for folks to know. It’s something that we’ll take a look at. So, stay tuned, basically. We’ll see what happens down the road.

Ride-Hailing vs. Vehicle Ownership Study

For this ride-hailing study, if people want some more information on it, you can simply go to newsroom.aaa.com. That’s newsroom.aaa.com, and you can read more about the ride-hailing study. You can also find more information about the “Your Driving Cost” study, which really breaks down what people are spending when they own a vehicle.

Tom Smith: We’ll link to both of those from the iDriveSoCal website, as well, on this post. We will stay tuned for the AAA Pilot’s Club in the future. Doug Shupe from the Motor Club of Southern California. Did I get it right?

“The Los Angeles branch office is a great place to come and get your maps, travel planning…”

Doug Shupe: Auto Club of Southern California.

Tom Smith: Auto Club of Southern California, also known as AAA. The Senior Public Affairs Specialist, see I got your title right. That’s all that matters.

Doug Shupe: You got my title right, yeah.

Tom Smith: Thank you so much, as always.

Doug Shupe: Thanks, Tom.

Tom Smith: For iDriveSoCal, I’m Tom Smith. Thank you, as always, for listening.

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