Uber drivers are encountering more than a few South Africans who have sold their cars and started using Uber as their main mode of transport. I know this, because, as one of those South Africans, I have had conversations with more than 350 Uber drivers over the past two years.
Two years ago, I sat down on a Sunday afternoon and compared the cost of owning my car with the cost of using a mix of Uber, rental cars and the train.
I estimated that, if I ditched my car, I would save between R25 000 and R45 000 every year, provided I moved closer to work. As it turns out, I have saved nearly R100 000 since that Sunday. I used the money to pay the deposit and transfer fees on a flat, which I rent out on Airbnb to pay the mortgage bond. And because I have no car debt, the terms of my bond are highly favourable.
For those who think they could do the same thing, consider the following:
1. Get over the idea that you will look like a penny-pincher without a car. The secret is to be generous. To overcome the discomfort of asking friends and colleagues for lifts, it might help if, as a rule, you pay for the parking and the drinks. Always insist on making a contribution to the petrol expense for longer trips. Use UberBlack on special occasions.
When the right mood takes me, I don’t feel particularly ashamed of my frugality. From time to time, I even get a kind of cheap thrill from the thought of resisting a more materialistic lifestyle.
2. Think carefully about where you live. Be open to the idea of making a drastic move. You want to find the neighbourhood that, over the next few years, will allow you to make 20km trips half as often as 10km trips, and 5km trips three times more often than 15km trips. It is better to open Google Maps than to rely on your intuition when doing this exercise.
The cost of my rent remained unchanged after I moved closer to work. However, if you need to move to the city centre, you will need to down-scale your accommodation significantly. It might be easier to think of such a move as a temporary arrangement.
3. Ask yourself what’s the worst that can happen. I have never been stranded without a car, or waited longer than seven minutes for a ride, so I don’t have better advice than that.
4. Work hard to calculate the best cost estimates that you can. It may or may not be worth your while to sell your car; fight anything that feels like wishful thinking. Spend time and energy estimating each of the expenses in this table, and then trust the conclusion that comes from your work. If you are thinking about it seriously, it may be a good idea to ask an independent financial adviser to help you with the calculation.
If UberPool, a new form of ride-sharing that has been implemented in countries such as France, is introduced in South Africa, Uber promises that the cost of Uber rides will fall by at least 20 percent. Even Google is trying to compete with Uber as a ride-sharing service.
Before long, it seems likely that more South Africans will stand to benefit from making these calculations. If Uber’s fares remain this low, in 10 years we might look back on the times when everyone owned a car and see it for what it is – absurd.
• Pieter du Toit is a Fellow of the Actuarial Society of South Africa and a member of a group of qualified and student actuaries writing articles on topics that serve the public interest.