Reasons for not purchasing a personal car and calling that cab instead

You can call a cab any time. You don’t have to drive amidst chaos and increase your stress levels. The time you spend to travel can be used to accomplish something productive in the backseat of an air-conditioned vehicle. You don’t have to worry about finding parking space or pay a bomb for one or even worry about maintenance. You can enjoy an evening with friends without worries. And if these benefits aren’t enough to make you think about that personal car purchase, hear this. A Crisil study has found that owning a car isn’t a feasible option if the vehicle is going to clock less than 12,000 km in a year.

According to rating agency Crisil, among the factors driving up passenger preference for cab aggregators is the cost per kilometre. A Crisil Research study considers the average cost of hailing an aggregator cab to be Rs 19 per km, compared with Rs 18 for a traditional taxi, and Rs 22 for a personal car. According to the Study, given the average driving distance of 12,000 km annually for an Indian car, the cost of usage works out to Rs 22km (including fixed and variable costs). A personal car is cheaper only if the distance driven is more than 15,000 km annually. With a chauffeur, that distance doubles to 30,000 km.

According to Binaifer F Jehani, director, Crisil Research, the share of a personal car in transportation is higher than taxis and three-wheelers despite the higher cost as people are willing to pay for greater convenience. High costs are also not going to deter first-time car buyers. “Consumer surveys have indicated that while a person will likely buy his first car anyway -since it is an aspirational goal -those who are planning to buy a second car would be more likely to defer their purchases,” she added.

Binaifer further explains that the increasing shift towards cab aggregator services will have wide-ranging ramifications. She said, “Cab owners tend to use more fuel-efficient cars than personal car users, which means lesser emissions. Since more cars will be on the road for more hours, parking woes could ease to some extent. A shared aggregator cab is available for as low as Rs 11 per km, and offers the convenience of doorstep pickup, chauffeur, and air conditioning.”

According to the Crisil study, aggregators such as Uber and Ola are adding vehicles to their fleet at a fast pace. At the current rate, about 15% of the total cars sold by 2020 and 30% by 2030 would be utilised by aggregator services and regular cabs. Since cabs will end up utilising their entire lifespan, a lesser number of cars will be required on the road, leading to a 20% reduction in car population by 2030.

Source: TOI