Should I Own A Car In M’sia In 2021? Cost, Lifestyle, & Other Reasons

When the pandemic hit, businesses had to accept working from home, and it looks like that will continue into 2021.

With less driving, personal cars stood still in parking lots and driveways, depreciating over time. Consideration of this raised the question of whether cars are still a necessity and what are the influencing factors in that decision.

If you’re thinking about buying a car (or maybe selling your current car because it’s underused), here are some questions to think about before making such a decision.

1. Can I afford to own a car?

Let’s take the Perodua Myvi 1.5LH (2018) as a case study, as it is a popular and affordable car in Malaysia that is suitable for young graduates as well as small families.

To note: We have chosen an older variant of the Myvi because it has a known damping value.

Link for the purchase price of MYVI here.

The estimated cost of ownership over 3 years is 17,381 RM (this calculation is based on the assumption that the mileage of the car does not exceed 20,000 km per year). This includes the depreciated value of the car, insurance, road tax and service, but excludes gasoline charges.

Using four different travel scenarios, differentiated by the distance traveled per week (in km), we calculated the average cost per km to drive. This does not take into account the amount of loan interest accrued over time.

From the table above, if you only drive 100 km per week, you will pay a higher average cost per km than driving more.

But that is only a glimpse, as the total cost of owning a car is highly dependent on each individual’s circumstances.

You might think that buying a car is a rite of passage and should be a flaw in your life journey, but the past year has challenged the financial stability of many people and a car is a serious commitment. for at least a few years.

Owning a car means you are committed to minimum monthly fixed costregardless of your personal financial situation. In the event of an emergency like sudden illness or unforeseen setbacks like losing a job, the monthly installment still has to be paid. This even includes the current situation where many cars are idling during MCO.

After all, historically, about a quarter of bankruptcies in Malaysia are due to auto loan default. Choosing not to own a car allows more liquidity and flexibility regarding your monthly expenses.

2. Am I ready to take on the responsibilities of car ownership?

Caring for and maintaining a car is a necessary chore to keep it safe and usable. But in a 2018 survey, Bosch found that more than 50% of Malaysian drivers lack knowledge about basic car maintenance and its impact on passenger, car and road safety.

Car maintenance is a fixed and regular need, starting with periodic inspections, checking oil and fluid levels (and topping up), and monitoring tire pressure and tread depth. This does not take into account the other components that make up a car and affect its performance.

3. Am I able to manage the consequences of any potential accident?

In 2019, the number of road accidents hit an eight-year high.

In the event of an accident, car owners must tow the car, file a police report, make insurance claims, repair a car, etc. Besides time and effort, it could lead to loss of non-claim remission (NCD) and increased depreciation of the car.

Although car accidents happen frequently, the main difference from car rental or e-hail is that you don’t have to personally take care of repairs, insurance, or maintenance.

4. How much time do I have to spend traveling?

In 2019, Waze data estimated Malaysians spent an average of 1 hour and 12 minutes per day on the road.

For some, long car trips are the norm due to where they live and lack of access to public transport. But compared to ten years ago, we now have many more transportation options available to us.

In a 2020 international study, analysis showed that when consumers had a choice, they saw transit or email as an opportunity to handle work emails, important calls, or social media while someone else is driving. This choice is motivated by the preference for productivity.

However, here in Malaysia, compared to public transport, a 2019 study found that private cars were favored because they are seen as more convenient. The study concluded that a full public transport system is needed before commuters can make the switch, and they expect the same convenience they enjoyed with cars.

5. What should I prioritize when it comes to having flexibility and convenience?

Depending on your lifestyle choices and priorities, different modes of transportation will suit different people.

In a Malaysian study from 2019, car owners appreciate being able to move around at all times, which allows them to take spontaneous trips. Without credible, real-time information on the availability of public transport and daily service routes, this level of convenience can only be matched by emailing or renting a car.

Last question: Do I have to own a car?

Aside from various factors, a key question is, “Do I want to commit to a fixed cost to own a car, or do I prefer more financial flexibility in my life?”

With gross income of RM2,900 / month, what’s the maximum monthly debt repayment amount you should have?

How many bankruptcy cases in Malaysia are due to auto credit default?

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