Thursday, April 22, 2021

Car ownership revisited

 Every now and then, someone will ask, "Is it better to own a car or take taxi everywhere in Singapore?"

And someone or some news organisation will try to answer that question.

So the latest attempt summarises it thus:

At a glance, here’s how the monthly bill of the various options looks like:
  • Regular car ownership (Honda Civic): $1,589
  • Cheaper car model: $1,200+
  • Red plate: $1,278.78
  • Cabbing: $822.40

monthly car ownership costs car in singapore


But this is an "eternal" question (at least in Singapore), and it had been asked before.

Just 8 years ago, there was "Owning a car could cost you $1.6m over the years":

"She calculated that owning a 1.6-litre car here could cost between between $1,304 and $2,641 monthly, for loan repayments and running costs such as petrol, insurance, parking fees and servicing. 
This could add up to as much as $1.6 million over 50 years, assuming one has a car from age 25 to 75."

And this blogpiece "Four 3-letter things you're doing wrong (Life in Singapore)", on buying a car (COE):

There are several ways to approach this issue.

Financially, a car is a money pit. And a tax drain on you.

Logistically, living in Singapore, one doesn't really NEED a car. It is at best an expensive convenience. But more likely an expensive, unnecessary luxury.

There are lots of arguments, and I do not want to rehash them all, so here is just something for you to think about.

Calculate how much it would cost you to own a car. Here's a quick and simple estimate.

Let's say you buy a car for $100,000 (this figure is simply for ease of calculation. You can use more "realistic", updated numbers.) And this includes COE.

Let's say it costs you the same amount over 10 years in running costs - fuel, parking, ERP, routine maintenance etc. (Let's assume you don't have an accident in 10 years.

So, owning a car will costs you $200,000 for 10 years, or about $20,000 a year. Or about $1700 a month.

Now, based on your travel patterns, would you be likely to spend $1700 a month on cab fares? Less? Way less?

Simpler computation? Take your monthly instalments for the car loans you have to take out. Say, $1000? Add monthly fuel, and parking charges. Total, say $1300 a month. Would you be taking $1300 in taxi fares a month?

If you do, by all means, you should get a car. Maybe.

Because when you own a car, you can only drive the car when you are driving the car. You should not be texting, or checking your FaceBook, or replying to emails, or watching Korean drama serials or Hollywood Blockbusters.

If you were taking a train, or a bus, or a taxi, you could.

And after a while you might forget about the bad mistake you made buying a cheaper flat an hour away from your workplace, instead of the more expensive flat that was just walking/cycling distance to your office (see above).

Then someone will raise the issue of the frequent breakdown of the MRT.

Personal question: how many times have you been personally affected by the train breakdowns? How many minutes did it add to your commute? How did you eventually get home or to the office?

I haven't tracked the number of breakdowns but let's just take a round number. Say there were 10 breakdowns in the past 12 months, and let's say they ALL affected you personally, and they on average added 30 minutes - no - ONE HOUR to your commute. So you wasted a total of 10 hours over 10 breakdowns in the last 12 months.

So you decided, after the 10th breakdown, and the 10th hour you wasted that ENOUGH IS ENOUGH. You're going to buy a car!

And you are willing to spend at least $15,000 a year to avoid wasting 10 hours of your life annually on a public transit that breaks down regularly. Or too regularly by your reckoning.

$15,000 a year to save 10 hours. That's $1,500 an hour.

Ok. Maybe 10 hours is a low estimate. Say the breakdowns in a year caused you 30 hours in wasted time. That's $500 an hour. What this means is that even if the GRAB or Uber Surge pricing rises to $500, you'd still be better off taking the train, and spending $500 in "Ride Sharing" THAN TO BUY A CAR!

But we don't make decisions that way do we?
[Edit: After I had published this, I realised that the argument above is a simplistic argument, and computation. I would still leave it there because, it is sort of relevant as a "push factor" for one to get a private vehicle. But if you DO decide to buy a car, it would NOT just save you time from when the public transport breaks down, but every day in your commute. Say a private vehicle saves you 1 hour a day -- no! let's say it saves you TWO hours a day in commute. Or about 48 hours a month. Assuming it costs you about $1500 a month to own a car, you would need to earn about $31 an hour to make it worth your while to own a car ($1500 / 48 hrs a month). If you earn only $15 an hour, you need to work 4 hours a day to save 2 hours in commute. So for half the day, you are working for your car. How much is $31/hr in terms of monthly salary? About $5500 a month. That is if you are saving 2 hours a day in commute with a car. If your time savings is less, you really need to earn a lot more.]

What about autonomous cars? Cars that can drive themselves?

It would be great! If it ever comes about. I don't mean intermediate autonomous (or nearly autonomous) cars. I mean fully autonomous. So I'd just get into the car, tell the car my destination. Then sit back, relax, read a book or take a nap. And then minutes later I'm at my destination. Just like taking a cab. And in fact when my car has taken me to where I want to go, instead of parking it somewhere (have to pay parking charges), I'd "release" it to be an autonomous Grab car for rent, and make money for me.

Except... everyone will likely have the same idea, and Autonomous cars would be seen as an investment, and not just a money pit. So people will pay a premium to own and use and "Uberise" ("Graberate"?) the car to offset its costs. And because it can offset its costs, its costs will rise. Until it is no longer makes economic sense to buy one.

It sounds like a good idea, but society and economics will adjust to this new factor, and any economic advantage will be neutralised in due course. But I could be wrong. Check your math.

[Note: This may be the last generation that needs to learn how to drive.]
That blogpiece was written when there were too many MRT breakdowns, and it was getting on people's nerves. But today, that is less of an issue. Also less of an issue - Bus services and frequency, since the LTA switch over to the bus contracting model.

So today (or in 2021), the MRT is back to being reliable (or more reliable than say 3 years ago when there were frequent disruptions), and there are fewer complaints about bus overcrowding, or bunching, or being late or infrequent (though that could also be because of reduced crowds and demands due to Covid19 measures like working from home). But we are now in Phase 4 (?) of opening up and people are going back to their offices (or the govt has lifted restrictions on working in offices). So maybe we will hear complaints about crowded buses, and bus bunching now that more people are going back to work.

But the "New Normal" may mean that people may have a mix of office hours, and working from home, which would reduce the amount of commuting, which means that if your vehicle is mainly to bring you to work, there would be less use for it when you work from home.

And still, COE prices are going up! I guess that's good for our Budget


No comments: