DUBAI 15 February 2018: For those who have recently landed in Dubai, or are long time residents feeling the pain of rising costs, comparing the advantages of owning a car, renting or opting for chauffeured services in the UAE, is quite a common practice when considering the options.
The experts at CarSwitch.com have crunched some numbers to bring some insightful findings.
To explore each option, chauffeured ride apps were selected; and, to keep the comparisons fair and consistent, a Lexus ES300 in each option was chosen so that similar driving experiences are considered. Finally, the results were determined by assuming daily commutes come down to an average of two 30 km trips a day, 6 days a week, so hitting an average of 20,000 kms a year with half of them crossing a Salik gate.
Owning a mid-size mass luxury sedan such as a Lexus ES 350 costs approximately Dh35,000-40,000 per year. The individual costs that follow include:
- Dh25,000-30,000 in car depreciation as ultimately the car will lose quite a bit of value over its lifetime
Dh3,000-4,000 for comprehensive insurance - Dh1,000 in registration related costs such as the annual inspection fees
- Dh2,750-3,250 for cleaning, service, and maintenance costs
- Dh4,000-5,000 in Salik and fuel costs assuming January’s ~2 AED per liter and an average consumption of 9 liter / 100 kms for the Lexus ES350
Renting the same type has less complicated costs primarily because registration, service and maintenance costs are taken care of and it adds up to about Dh60,000-65,000 per year. Namely:
- Dh55,000-60,000 per year in rental cost, as monthly rates are typically Dh5,000-6,000 due to seasonal peaks and slumps and most agencies provide discounts on longer term commitments
- Dh4,000-5,000 in Salik and fuel costs which are similar to that of owning a car
Chauffeured rides are the simplest in terms of cost calculations and risk factors such as finesor accidents. Associated costs add up to a grand total of Dh45,000 per year, assuming an average base fare of Dh8 on top of Dh2 per kilometer as the rates vary on time and demand. An added perk is being chauffeured around without the headache of driving yourself, and there is certainly some economic value in clearing those extra emails or expanding your horizons in the latest book you grabbed.
Therefore, over the course of the year, it would seem owning a car is the right financial choice. However, for the economics to play out well, it’s important to keep these key cost drivers in mind:
- It is recommended to buy used car as a new car has a much steeper depreciation in the first year, which is the largest cost associated with owning a car
- The car must be in good condition to avoid unanticipated repairs which could turnout to be costly.
- The timeframe needs to be close to a year or more. Should you only need a car for a few months, owning becomes costlier.