The most common debate I find myself having these days is over whether or not it is cheaper to buy or rent a home in South Africa. Those taking the position for renting always refer to this simple mantra: “As a renter your rent is the maximum you pay, and as a homeowner your bond is the minimum amount you pay.”
This alone has made me inch over towards the side of the renter class when it comes to your personal residence, but lately a similar debate has been waging on in the vehicle ownership space.
Many consumers have found themselves wondering whether or not it is cheaper to make use of ride-sharing apps like Uber and Bolt or use their own car. At first glance this may seem a silly topic of debate. Obviously it would be cheaper to own your own vehicle… right?
Well, apparently the debate is a lot more hotly contested than one might imagine. In fact, there seems to be quite a lot of evidence to suggest that Ubering versus owning your own car has many similarities to owning your home versus renting it.
Where e-hailing beats vehicle ownership
Finding out whether Uber or vehicle ownership is going to be cheaper requires breaking it down for everyone’s individual circumstances. Not everyone is fortunate enough to have purchased their car with cash, some people work from home, and others have an hour-long daily commute to work. The answer to what is cheaper between owning a car and ride-sharing is, as is the case with many complex questions: it depends. So let’s break it down a little better.
If you commute to the office twice a week and are traveling no more than 15km, that comes out to a total of R524 a week on Bolt at R131 per trip. If we multiply that number by 4, we end up at R2,096 on transport to and from work a month. Accounting for some weekend trips and shopping here and there, we can assume that someone on this ‘travel plan’ would be looking at a monthly budget of around R5,000.
Now if we account for the vehicle ownership side of things, this is what your monthly costs would look like more or less. Assuming your car cost you no more than R350,000, while the average cost of a car in South Africa sits at R392,174, we can assume your monthly installment for that vehicle would be just over R7,100. Taking insurance into account at a cost of R1,200, that’s exactly R8,300 a month before petrol has been taken into account.
Assuming you only spend R1,500 on fuel, which is well under the South African average of around 3.31% of your monthly income on fuel (this translates to approximately R2,000 to R3,000 per month for a standard household), this means your total average spend per month on vehicle ownership would be a minimum of R10,000. And this is before we think of setting any money aside for possible damages and repairs, as well as the cost associated with parking, which can add up substantially depending on where you live.
Examining the question through this lens shows us that ride-sharing users are getting to save substantially more of their salaries than their vehicle-owning counterparts. For this specific scenario, the question is simply a no-brainer, Uber and Bolt are far cheaper than owning a car.
Making your car work for you
Short commutes, minor weekend trips, and shopping expeditions put Bolt and Uber way ahead of vehicle owners in terms of cost—there is no doubt about that. When taking into account vehicle finance, insurance, repairs, maintenance, and parking costs, vehicle owners are clearly taking an unnecessary financial beating while e-hailers seem to make their commute unbothered. However, there does come a point where e-hailers can no longer keep up with the mammoth costs of transportation when traveling over longer distances, as opposed to the 20-minute commute to work twice a week. In fact, we have the South African insurance company 1Life to thank for pointing out the moment at which vehicle owners start to save.
Earlier in the year, insurer 1Life crunched the numbers on whether it makes financial sense to own a car. They compared the cost of owning a VW Polo, one of the best-selling vehicles in South Africa, against UberX, Uber Go, and Bolt services as these are most readily available. What they discovered provides an important benchmark for South Africans trying to make this difficult financial decision. According to their analysis, if you travel around 650km a month or less, you can save money by using ride-hailing services. However, if your monthly travel exceeds 1,850km, you’re probably better off owning a car. This creates a clear threshold that can guide consumers in making the right choice for their specific circumstances.
The fixed costs of owning a VW Polo amount to approximately R5,868 per month according to 1Life’s findings. This doesn’t include the variable cost of petrol, which they calculated using average urban fuel consumption per litre for the Polo and April 2021’s petrol price of R17.10 a litre (which has since climbed significantly). These fixed costs remain constant regardless of how much you drive, meaning that the cost per kilometer decreases the more you use your vehicle. This is where the economics start to shift in favor of vehicle ownership for high-mileage drivers.
For those who find themselves needing to travel more than the 1,850km threshold monthly, owning a car becomes not just convenient but economically sensible. The per-kilometer cost of ride-hailing services simply can’t compete with ownership at these distances. If you fall into this category, there are several ways to make your car work harder for you financially. Some vehicle owners offset their costs by registering as drivers for ride-sharing platforms during their free time or joining delivery services for weekend income. Others use carpooling apps to share their commute and split fuel costs, effectively turning empty seats into revenue generators.
Optimizing your vehicle finance and insurance can also significantly reduce the fixed costs of ownership. Negotiating a better interest rate, making extra payments toward your principal when possible, or refinancing after improving your credit score can all lower your monthly installments. For insurance, shopping around annually for better rates, installing tracking devices for lower premiums, or considering pay-per-kilometer insurance options if you don’t drive much can make ownership more affordable. These strategies can potentially lower that fixed R5,868 monthly cost identified by 1Life, making the ownership equation even more favorable.
The decision between ride-hailing and vehicle ownership doesn’t have to be binary. For those whose monthly kilometers hover around the threshold identified by 1Life, a hybrid approach might be most economical. You might own a fuel-efficient vehicle for longer trips but use ride-hailing for peak traffic periods when fuel consumption is highest. Alternatively, you could save your car for weekends and longer journeys where ride-hailing costs add up quickly, while using public transport or carpooling for regular commutes. This flexible approach allows you to enjoy the convenience of vehicle ownership when it makes sense while avoiding unnecessary costs when alternatives are more economical.
