While Canberra is not a big city, it is relatively spread out so there is a common assumption that everyone needs a car to get around.
Do you depend on a car in Canberra? And if you live in one of Canberra’s inner suburbs, would ride sharing suffice? Or if you live further out, could you get away with having just one car in the driveway?
Owning a car involves a significant capital outlay for its purchase price – whether it be new or used – and then there are the thousands of dollars spent every year to register, insure and maintain the vehicle, all while most cars sit parked for 90 per cent of the time.
Unless you are a parent ferrying multiple children around the city, or you use your car for work, your expensive piece of capital just sits idle.
Curious to find out if it is worth owning a car, RSM Financial Services Australia crunched the numbers and the results are interesting.
RSM senior financial advisor Chris Oates and para planner Ross Trimboli say they started their calculations with basic running costs and assuming travel of less than 20,000km per year.
“For the average Canberran who travels 35km per day, we calculated the total running cost of a car to be approximately $16,000 a year,” says Chris. “This includes fixed costs such as registration, insurance and servicing – we calculated these at $4000 a year. Then we added $8000 a year for fuel and other running costs, and then $4000 a year for parking.”
Chris says for Canberrans who live in the inner suburbs and working in the city, the fixed cost of owning a car is much less, calculating registration, insurance, fuel and parking to be approximately $8000.
It should be noted these figures do not include the purchase price, loan repayments, interest or depreciation on the capital cost of the car.
In summary, cars are expensive.
Now, if you choose to use one of the orange or purple e-scooters populating our city, the costs when compared to a car are significantly less.
Back to our average Canberran who is travelling 35km a day, RSM calculated the cost of using an e-scooter at approximately $15,000 a year, and for those inner-suburb types, travelling to and from the city from Kingston, Yarralumla or Turner, for example, the cost would be approximately $5000.
But what about the shopping or if it is raining? Chris and Ross say the cost of ride-sharing for the average Canberran would be $21,000 to use an Uber every day to get to and from work, and for people in the inner suburbs it would be around $5000.
So if you are an average Canberran, the cost comparison is $16,000 for a car, $15,000 for an e-scooter, and $21,000 for ride share.
“Obviously the car wins in this case,” says Chris. “But if you currently have two cars in your household and one of those only gets used on weekends, there is a good case for substituting that second car for ride share or a scooter.”
Ross adds: “If you can arrange to car pool to work, leaving the car for the other member of your household, the argument for a second car really diminishes.
“We did not calculate the cost of public transport for this exercise, but you can safely assume the cost is less than ride share so if you mix the use of one car, public transport and ride share between a couple, not owning that second car could save thousands.”
Living in the inner suburbs, the argument for not owning a car becomes stronger.
“With the annual cost of a car for someone living in the inner suburbs at $8000, against $5000 for a scooter and $5000 for ride share, you would really have to look at your lifestyle and freedom to justify owning a car,” says Chris.
“It really surprised us how much it costs to have a car. Although if you live in Canberra’s outer suburbs, we drew the conclusion that it makes financial sense to own a car, but maybe not all households need a second car. It could be cheaper to car pool and do the odd Uber trip.
“But if you live in the inner suburbs, if you are not going to use your car, it is probably not worth owning it.
“Obviously you are paying for the convenience of having your own transport parked outside your home, but cars swallow up a big portion of your pay and it is important to think about the long-term costs.”
RSM are financial advisers and auditors for Canberra businesses and individuals. For more information, visit RSM.