Ola-Uber vs buying a car, Which one is cheaper?

Finance Minister Nirmala Sitharaman recently remarked weaker demand for automobiles to a change in young adults habit of preferring app-based cab services such as Ola and Uber to travel, instead of buying their own cars.

The reasons for the slowdown in auto sector may be the rise of app-based cab services such as Ola, Uber and zoomcar may be one factor, but it is not the sole reason.

A cab offers its own set of conveniences, such as not having to worry about driving in heavy traffic congestion or paying steep penalties.
Exact fares for Ola or Uber are very difficult to estimate as they depend on the city, the class of cars, time of the day, route and the expected traffic therein.

A Cab could cost you an average Rs 20 per km or therabouts.

For comparison's sake, we have assumed the cost of a Wagon R (price: Rs 5.67 lakh on-road in Mumbai).

To make the calculation possible, Let us assume that :

- EMI of about Rs 9,000 (based on financing of 75 percent, for a loan of 5 years). Besides an upfront down payment of Rs 1,41,750, which works out to an amortised cost of Rs 2,362 per month.

- Fuel cost: Rs 6.5 per km (assuming mileage at 12 kmpl and petrol at Rs 78 per litre)

- Maintenance cost about Rs 417 per month (Rs 5,000 per year)

- Driver's salary: Rs 10,000 per month

- Depreciation cost: Rs 4,725 per month (assuming sale of the car after 5 years of ownership at 50 percent cost, or Rs 2,83,500).

Put all of this together and, assuming a monthly run of about 1,000 km per month, you get a monthly cost of about Rs 18,280 per month if a driver's salary is not included.

This works out to around Rs 18.3 per km.

Factors that work in favour of buying a car, such as not having a cab driver cancel on you, the aspiration quotient that a car offer, during times such as a weather disruption when cabs may not be available.

After calculations, it may be assumed that car ownership works out to naerabout or marginally cheaper, on a per kilometre basis.

CONCLUSION:
If you choose to drive yourself it is better to have your own car and if you need a driver then you may go for cabs for cheaper rides.