Singapore is known for its expensive cars. With an average car price of around S$106,000 in 2017, cars in Singapore are 4-5x more expensive than in the US or Korea. In fact, car prices in Singapore are the highest in the world. This raises an interesting question: is using ride-hailing services like Uber and Grab actually cheaper than owning a car in Singapore? According to analysis by our team at ValuePenguin, the cost of using Uber on a daily basis is quite comparable to the cost of owning and driving a car.
Owning a car = Using Grab or Uber = Costs S$15,000 to S$16,000 per year
On average, it costs around S$15,000 to S$16,000 to drive a car or use ride-sharing services daily for a year. However, when other incidental costs such as parking fees and various incentive programs from Grab and Uber are taken into account, using ride-sharing apps daily 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 by the Land Transport Authority of Singapore, an average car drives about 17,500 km per year, which is about 4 trips of 12 km per day. We assumed that an average driver drives a Toyota Corolla Altis 1.6, the most popular car in the country. This particular car has a fuel consumption of 6.5 liters/100 km (or 15.4 km per liter).
|
Assumptions |
|
|---|---|
|
Annual distance |
17,500km |
|
Gasoline consumption |
15.4km/l |
To calculate how much it costs to own this vehicle and drive 17,500km per year, we considered the following main components: purchase price (S$104,995 / 10 years), annual car insurance premium (S$900, assuming 50% no-claims bonus), S$600 annual maintenance costs, S$740 road tax and S$2,341 petrol costs. This adds up to around S$15,000 annual cost of driving your own car. Please note that we do not consider the impact of the cost of the car loan or the resale value of your car, as these variables can vary significantly for each individual but should largely balance out. For a detailed calculation, see our guide to the cost of car ownership in Singapore.
|
Main costs of car ownership |
Annual costs |
|---|---|
|
Purchase price |
S$105,000/10 years = S$10,500 per year |
|
Annual insurance premium |
909.5S$ |
|
Maintenance costs |
399 € |
|
Vehicle tax (1,600 cc engine) |
499 € |
|
Petrol (S$2.06/litre) |
2,341S$ |
|
In total |
S$15,113.5 |
To calculate the equivalent cost of using Grab or Uber on a daily basis in Singapore, we considered the following main components: total base fare, cost per mile and cost per minute of Grab and Uber. We assume 1,460 trips per year, which is about 4 trips per day and 12km per trip, which is the average for private cars. We also assume that 1km takes about 1.2 minutes on average, which is an average speed of about 50km/h (the average is 60km/h on expressways and 30km/h on main roads). The total for both services is about S$16,000.
|
Annual costs for ridesharing services |
Above |
Grab |
|---|---|---|
|
Number of trips |
1,460 |
1,460 |
|
Base price |
S$4,380 (S$3/trip) |
S$3,650 (S$2.5/trip) |
|
Cost based on distance (17,500 km) |
S$7,875 (S$0.45/km) |
S$8,750 (S$0.5/km) |
|
Time-based costs (21,000 minutes) |
S$4,200 (S$0.2/min) |
S$3,360 (S$0.16/minute) |
|
In total |
S$16,455 |
S$15,760 |
Can you save even more?
While the annual costs may seem the same at first glance, there are other factors that can significantly affect this comparison. The first big point is parking. Free parking is hard to find in Singapore and this expense can easily make up most of the S$1,000 difference between the two costs calculated above. For example, if you pay S$3 per day for 5 days per week, you can easily pay S$750 in a year.
Second, we assumed you use UberX and GrabCar, two basic services for solo drivers. If you opt for their ride-sharing services instead, you can save another 30% or more, although your rides might take a bit longer.
Lastly, we can also look at how credit card savings can impact our analysis. For example, there are many fuel credit cards that can save you 20% or more on your petrol costs, as well as cashback credit cards that can help you save significantly on your Grab and Uber rides. For example, the Citi Cashback Card and Standard Chartered credit cards offer up to 20% off your Uber and Grab rides, while the UOB YOLO Card gives you free Grab rides on weekends.
In Singapore it is no longer necessary to own a car
Especially in our comparison between owning a car and using ride-sharing apps, the impact of these credit cards is actually significant. Since petrol costs for an average person are only around S$2,300 to S$2,500 per year, saving even 25% of that is only S$625. For comparison, saving 20% or more on your Grab and Uber rides can save you up to S$3,000, making the latter significantly cheaper than owning a car.
Furthermore, Grab and Uber offer the added benefit and convenience of allowing you to relax or be productive while you ride, rather than fiddling around in the driver’s seat while you drive. Of course, you’ll have to wait for your ride at some point, but it’s not much better than walking to the parking lot and back to get to your own car. With the lower cost and increased convenience that ride-sharing apps bring, it seems that owning a car is no longer necessary for the average Singaporean.
The article “Grab and Uber are cheaper than owning a car in Singapore” originally appeared on ValuePenguin.
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