Readers of this website will already be aware of the fact that a car is not an asset, but a liability. The value of your car starts depreciating the moment you drive it out of the showroom. But given the convenience and independence that a car provides, there is no way to objectively look at vehicle ownership as a financial decision.
But car ownership is not necessarily a sign of convenience in a country like Canada where nearly 85% of the population live in urban and metropolitan areas. Just three cities – Toronto, Montreal and Vancouver house nearly a third of all Canadians. Given the level of urbanization in the country, services like Uber could be a great commutation alternative to owning your own car.
Let us do the math. On an average, Canadians travel nearly 17 kilometers to and from work and spent around 26 minutes each way. A Canadian Automobile Association (CAA) study claims that the average midsize car in a state like Ontario costs about $0.54. Driving 25 days a month works out to around $5500 a year. Add to this the $1458 spent annually on auto-insurance premium in Ontario and the annual costs work out to nearly $7000. If you own a $35,000 car, the loan repayment alone would add up another $5000 annually. In comparison, hiring an UberX in Toronto will cost around $23 one way. That’s $14,000 a year.
At the outset, hiring an Uber may seem like a more expensive option. However it also needs to be pointed out that being driven around from home to your workplace also frees up your time which can add to your productivity. Overall, Uber might work out cheaper for the average commuter.
But this is not always true. The cost of hiring an Uber may work out more expensive if you travel longer distances or work for more than 25 days in a month. At the same time, owning a car can be cheaper if you buy a used car, or share your ride with fellow commuters from your suburb to the city.
There are other issues with relying entirely on a third party service to drive you around the city. Just in the past two months, Uber first announced its decision to pull out from Quebec only to backtrack on the decision a few weeks later. As a commuter, this brings about a lot of uncertainty that could be altogether avoided by owning your own car.
There is also a third option which is making use of public transport. The major cities of Canada are extremely well-connected by public transit by roads and trains. The monthly cost of public transport can vary anywhere between $40 to $160 which is significantly lower than owning a car or hiring Uber. Not surprisingly, nearly a quarter of commuters across Canada make use of the bus and rail networks to get around to and from work.
In conclusion, buying a car is not always the best financial decision. Depending on your commuting patterns, it may be cheaper to use on-demand services. If you are located close to bus or rail networks, public transit may bring down the cost of travel significantly. Yet, there is no gainsaying the fact that car ownership does bring a certain level of independence and convenience which is not offered by any of the alternatives. If you are someone who would need such independence, car ownership makes sense. Otherwise, you are better off using public transport and Uber in the cities of Canada.