Buying A Car Vs Taking Grab: Which Is Cheaper?

Car owners generally fall into three categories: auto enthusiasts, people who treat cars as status symbols, and those who just need a piece of metal to get them from point A to point B. .

If you fall into the latter camp, you’re probably looking for ways to lower your transportation costs. After all, owning a car is expensive. An entry-level sedan could cost you 100,000 RM over five years!

Fortunately, it’s easier than ever to get around without relying on public transport. The question is: does it make financial sense to ditch your car and take it everywhere? Or should you sign up for a car subscription? Here’s how much it costs to own a car, compared to ridesharing and car subscription services.

What is the cost of owning a car?

The cost of owning a car goes beyond your monthly loan commitment. You will also need to factor in the cost of gasoline, maintenance, road tax, insurance, parking, and tolls.

Here is an example of a calculation based on someone buying a new Proton Persona. It has a relatively short daily commute and only spends RM150 per month on gasoline (according to a Malaysian Road Safety Research Institute (MIROS) survey, respondents spent an average of RM329.67 per month on gasoline. , but we thought it might be the case (fairer to use a lower number, since a person on long trips is less likely to use a carpooling service).

Some of the costs we included in our calculations – such as maintenance, tire replacement, road tax, and insurance – only occur once a year or every few months, but we’ve broken them down to reflect their true monthly cost.

Car Model: Proton Persona 1.6 Premium CVT (2020); 54,600 RM

Monthly costDuring the first five years
Amount of the loanRM94249,140 RM
Advance payment5,460 RM
Loan interest
10% deposit, 3% per year and 5-year term
7,371 RM
Gasoline costsRM1509,000 RM
Interview1RM51RM3 050
Tires2RM201,200 RM
Road taxRM7.50RM450
Car parkRM1509,000 RM
TollRM1509,000 RM

1 Based on estimates provided by
2 Assuming you change your tires every 2.5 years, based on RM150 per tire
3 Assuming you qualify for the No Claim Reduction each year

Based on the example above, while your monthly loan commitment is only RM942, your total monthly cost of car ownership is RM1572!

But what happens to your monthly fees after your auto loan is fully paid off? The cost of owning your car can drop to RM 609 per month:

Monthly costOver the next five years
Gasoline costsRM1509,000 RM
Road taxRM7.50RM450
InsuranceRM64RM 3,823
Car parkRM1509,000 RM
TollRM1509,000 RM

What is the cost of carpooling?

What is the cost of an average trip on a carpooling service like Grab? If you have a 10km commute to work, a GrabCar ride could cost you around RM15:

Cost per trip:

  • Base rate – RM1
  • Cost per km – 10 km x 0.80 RM
  • Cost per minute – 25 minutes x RM 0.25
  • Total = RM15.25

Assuming you take two trips per day for each working day, it could cost you RM 630 per month. Maybe you will also spend 50 RM per weekend. You will also have to pay your own toll charges. On top of that, you’ll also have to pay extra if you want to travel during peak hours – let’s say you make 10% of your trips during peak hours, resulting in double the fare. To simplify this estimate, we will assume that these costs will remain the same over five years:

Monthly costOver five years
Weekday trip
RM15 x 2 trips x 21 working days
RM63037,800 RM
Weekend trip
RM50 x 4 weeks
RM20012,000 RM
Dynamic pricing fees1RM83RM 4,980
TollRM1509,000 RM
TotalRM1,06363,780 RM

1 Assuming 10% of your trips are made during peak hours, which results in double the fare

RM 1,063 per month is a lot of money to spend on transportation – but it’s still less than the cost of owning a new car.

But these costs depend on the distance of your daily commute. If you live closer to work – say less than 3 miles away – and only pay 10 RM per ride without any toll charges, it could cost you 420 RM to come and go from work every day. Add 200 RM for weekend trips and you would spend 620 RM per month.

How much do car subscriptions cost?

Car subscriptions are relatively new in Malaysia. This is another way to “own” a car without having to buy one.

The way they work is simple. Each subscription platform offers a fleet of cars for you to choose from. You pick your car, choose a tenure, pay an upfront fee (which may be refundable), and then pay a monthly fee. This monthly fee covers insurance, road tax and maintenance costs. You can also trade in your car for another during your tenure for a fee.

There are three car subscription platforms in Malaysia: Flux, GoCar, and Renault. Here is an example of pricing for each platform:

Proton Perdana 2.0 (2015)Proton Saga 1.3 Executive (2018)Renault Captur (used)
Initial costsRM1 616RM1 680


RM2,500 (refundable)
Monthly fee1,200 RMRM840RM1299
Mandate36 months36 months12 months
Mileage limit (for the cheapest plan)1250 km per month1650 km per month20,000 km per year
Excess mileage chargesRM 0.64 / kmRM2.40 / kmRM 0.50 / km
Annual total 16,016 RM the first year;
14,400 RM for each subsequent year

Remember, these costs do not include your monthly gas, parking, and toll expenses. For example, if you go for a monthly plan of RM 1,200, spend RM 150 on gasoline, RM 150 on parking, and RM 150 on tolls, you could spend RM 1,650 per month on transportation.

In the short term, a car subscription can be cheaper than buying a car because you don’t have to pay a 10% deposit. In the long run, however, you’ll likely end up paying more with a subscription.

The cheapest plans for each platform also have a monthly or annual mileage cap, but you can pay more to increase it (or pay excess mileage charges). According to a MIROS survey, Malaysians drive an average of 28,184 km per year (or 2,349 km per month), so you may need to purchase a larger plan if you have longer journeys, or if you are traveling for a vacation or visiting your hometown. often.

But auto subscriptions aren’t really marketed for those looking for the most cost-effective auto solution anyway. Instead, they’re best suited for those looking for short-term flexibility or those who want to “ own ” a car without making large upfront payments.

Cost of car ownership vs carpooling vs car subscription

Based on the above scenarios, we pit car ownership, ridesharing, and car subscriptions against each other. Here’s how much they can potentially cost:

Annual cost of car ownership vs carpooling vs car subscription

Annual cost of car ownership vs carpooling vs car subscription

1 Based on the cost of owning a new Proton Persona 1.6 Premium CVT (2020); 5 year loan, 3% per year; including RM150 for gasoline, RM150 for parking and RM150 for tolls
2 Based on RM1,063 expenses per month
3 Based on an average estimate of 1,200 RM per month, including 150 RM for gasoline, 150 RM for parking and 150 RM for tolls

The takeaway from our comparison is that it can generally be more expensive to own a car, but only during the life of the loan. Once your loan term is paid off, owning a car can be cheaper than carpooling or a car subscription.

Cost of car ownership vs carpooling vs car subscription (over ten years)

1 Based on the cost of owning a new Proton Persona 1.6 Premium CVT (2020); 5 year loan, 3% per year; including RM150 for gasoline, RM150 for parking and RM150 for tolls
2 Based on RM1,063 expenses per month
3 Based on an average estimate of 1,200 RM per month, including 150 RM for gasoline, 150 RM for parking and 150 RM for tolls

Over the entire ten years, carpooling may be cheaper than owning a car, but only if you have a short commute every day.

What factors should you consider?

Of course, these costs are very subjective. The most profitable option for you will depend on these variables:

  • Cost of the car. More expensive cars will result in a higher cost of ownership. If you go for a cheaper car or a used model, it might be more profitable to own a car.
  • Lifespan of the car. How long do you plan to use your car? Car ownership is more profitable if you use your car longer to avoid buying a new car.
  • Travel distance. If you have a short daily commute, using a carpooling service can be cheaper than owning a car.
  • Worth your time. Do you have a long daily commute and hate wasting time behind the wheel? Using a mobile phone service can make sense if you are using the time you save on a job that is important to you or can earn you an income (assuming you are comfortable working on the back seat of a car). However, you will also need to balance this with the time spent waiting for your car to grab.

You can also enter your details into this calculator, which can help you calculate whether it is more profitable to own a car or use a rideshare service. It is intended for readers in the United States, but may apply to Malaysian readers as well.

Which one should you choose?

So which option is best for you financially? Usually it can be boiled down to:

  • Owning a car: if you have a long daily commute and intend to keep your car for many years.
  • Wrinkle-hail: if you have a short daily commute or if you value your time too much to devote to driving.
  • Car subscription: if you only need a car for the short term, or if you want to change cars frequently.

That said, sometimes it’s not all about the money. Each form of travel has its own non-monetary benefits. With car ownership, you have more freedom to move whenever you want and you can travel comfortably with young children or elderly parents. Carpool saves you the hassle of spending time in traffic or looking for parking. Car subscriptions give you the option to cancel if you change your mind or choose a new car frequently. You will need to decide what is most important to you.

Our sincere thanks to
Source link

Jothi Venkat

Leave a Reply

Your email address will not be published. Required fields are marked *