How do Uber and carpool apps impact the insurance and motor industry?

With economic pressures weighing down on consumers, we’re forced to find ways to cut expenses and free up disposable income. In certain areas throughout South Africa - investment, second homes, are being sold at a high rate and now with the advent of apps like Uber, the purchasing of a second vehicle is in the spotlight too.

The recent trend for the workforce to become more home based has reduced the necessity to travel long distances and consumers are becoming more aware about why they need a second car.

Then steps in Uber. Solving your affordability second car conundrum.

There are without a doubt many variables to consider, distance travelled, how often you make use of your vehicle etc. The financial company MyTreasury did a very interesting astudy on this very point.

STUDY:
They based their calculations on a Toyota Corolla, the most common car used by UberX drivers – the 1.8 Exclusive sells new for R300,900.
The car’s depreciation and financing costs - R61,000 a year.

Parking – R1,560 a year.

Insurance – R1,500 per month (R18,000 per year) for comprehensive insurance with a minimal excess.

Cleaning – If you wash your car once a month. R1,800 a year.

Licences, fines, tolls – these typically amount to R2,000 per year.

Petrol – Petrol costs depend on your driving patterns. R27,000 a year for the average South African driver.

The annual cost of car ownership for the average South African driver works out to R111,000.

TAKING AN UBER

The cost of taking an UberX is R7.50/km + 75c/minute. At average urban traffic conditions, we calculate an average cost per km of R9.

MyTreasury.co.za also consider what you spend but also takes into account what you gain. They estimate that the benefits of taking an Uber include freeing up time to organise your life: make calls, send WhatsApps and clear your inbox. Worth about R2.50 a kilometre.

If you drive less than 50 km per day selling your car and using Uber will save you money, that the average South African, driving 40 km per day (14,575 km per year), would save as much as R14,000.

INSURANCE AND MOTOR INDUSTRY

In addition there is a lot of talk about the impact apps like these will have on the motoring industry as well as short term vehicle insurance. I don't see any significant impact over the short term, however both of these industries will have to monitor the evolution of technology closely and without a doubt emerging markets and affordability are going to play a major part.


Statement by
Ruben T Miller
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