UBER cheaper than owning a car in India

UBER wants to make car ownership redundant. It may be on that path in India at least. Don't believe me? Bear with me for a minute and go through the following:
  • See table below for calculation. These assumptions lead to a cost of ownership per kilometre of Rs 15 and 30 paisa. For a mid-sized sedan as used in UberX
  • Now UBER charges 9 rupees per kilometre plus Rs 2 per minute and a base booking charge of Rs 40, and assuming an average trip of 8 km, the cost per km for UBER is Rs 14 and 63 paisa
  • I have not assumed inflation in maintenance and fuel charges assuming uber would also raise rates over a five year period
  • I have assumed fuel type as petrol, you change it to diesel which costs lower, and perhaps gives better mileage, but you would need to increase the maintenance costs and price of the car as well.
  • Uber is clearly edging out owning a car at the moment (mid range and up). The gap should be even higher for bigger cars versus UberBlack, as the price of cars goes up sharply which adds to cost per kilometre of ownership.
  • The icing on the cake is that UBER comes with a driver. Keeping a driver would cost you another 6-8 Rs per kilometre.
  • The question is how UBER affords this. The trick is in the number of kilometres driven per year by an UBER driver? [hint - Economics 101 – marginal cost versus fixed cost] 
Assumptions and Calculation:


Price of the Car
₹ 6,50,000
Upfront Payment
₹ 1,00,000
Loan Amount
₹ 5,50,000
ROI (p.a.)
12%
Duration (years)
5
Monthly Pmt
₹ -12,113
Total Loan Pmt
₹ -7,26,799
Total Amt Paid
₹ 8,26,799
Salvage Value
₹ 1,50,000
Net Amount Paid
₹ 6,76,799
Kms/Year
15,000
Total Kms
75000
Mileage/Litre
15
Cost of Fuel/Litre (Petrol)
64
Total Fuel Cost
           3,20,000
Maintenance/Year
           30,000
Total Maintenance
           1,50,000
Total Cost
₹ 11,46,799
Price per KM
₹ 15.3

 

 



SHARE

By: Kapil

    Blogger Comment
    Facebook Comment

0 comments:

Post a Comment