As South African households navigate economic uncertainties, the convergence of declining affordability and tech adoption is redefining mobility preferences across generations. E-hailing services offer a cost-effective solution not just for first-time buyers, but all South Africans, offering alignment with their financial means and tech-savvy lifestyle. By leveraging emerging tech solutions that incorporate artificial intelligence route optimisation, e-hailing platforms cater to the diverse needs of South African households, offering a more inclusive mobility ecosystem.
For first-time buyers, the dream of owning a vehicle often collides with economic realities. High upfront costs, coupled with ongoing expenses such as insurance, maintenance, and fuel pose significant financial challenges. In this context, the allure of e-hailing services as a pay-as-you-go alternative becomes increasingly appealing. First-time buyers, seeking flexibility and affordability, are turning to e-hailing platforms as preferred solutions for their transportation requirements.
Similarly, older generations, who may have traditionally favoured vehicle ownership, are embracing the convenience and efficiency of tech-integrated transportation alternatives. The widespread and accelerated adoption of technology during, and following, the COVID-19 pandemic has reshaped consumer behaviour across demographics. Older adults, comfortable with tech solutions such as online shopping and remote work platforms, are increasingly turning to e-hailing services for their transportation needs. The seamless booking process, real-time tracking and cashless transactions offered by e-hailing platforms resonate with this demographic, driving a shift away from traditional vehicle ownership.
E-Hailing Services
The rise of e-hailing services, facilitated by platforms such as Uber, Bolt and DiDi, has revolutionised urban mobility. Offering convenience, flexibility, and often cost-effectiveness, e-hailing has garnered popularity. In South Africa, where public transportation infrastructure may be lacking or unreliable in certain areas, e-hailing services present a viable alternative for commuting and leisure travel.
Factors driving e-hailing adoption
1. Cost efficiency: For many South Africans, the upfront costs associated with car ownership, including purchasing, insurance and maintenance can be prohibitive. E-hailing offers a pay-per-use model, eliminating the need for substantial investment.
2. Convenience: With the tap of a smartphone screen, e-hailing allows users to summon a ride within minutes, eliminating the hassle of parking and navigating traffic.
3. Environmental awareness: Shared mobility services, compared to self-owned, underutilised vehicles sitting idly for 23 hours out of every 24 in garages and parking bays can prompt an eco-conscious move toward the use of e-hailing services, particularly those incorporating electric or hybrid vehicles.
4. Social connectivity: E-hailing provides the platform for a shared experience, allowing users to travel together more economically, and with the ability to engage socially during their journeys.
The tipping point between ownership and usership
While e-hailing services offer advantages, the decision to forego car ownership is not without consideration. The tipping point for South Africans lies at the intersection of financial affordability, lifestyle preferences and evolving urban dynamics.
Despite the allure of e-hailing, many young adults and first-time buyers aspire to car ownership as a symbol of independence and mobility. However, economic constraints, exacerbated by factors such as student debt and uncertainty in the job market may delay or deter their aspiration becoming reality.
What is the tipping point?
We compared the cost of owning a car and the cost of e-hailing transportation. We used an entry level vehicle priced at R175 000. We have assumed that the car owner would insure the vehicle and maintain it optimally. This may not fully reflect the reality for many drivers, and insurance rates can vary depending on driver age, risk profile, claims history and driver behaviour.
We priced this against Uber X, Uber Go and Uber Comfort services. While Uber rates may vary depending on demand, the rates used in the calculation were deemed representative of the charges work commuters could incur.
For purposes of this comparison, we used an all-in running cost of R4.84/km commensurate with AA rates on the premise that drivers are keeping vehicles for longer due to escalating purchase prices, so good maintenance is therefore prudent. This rate would include fuel, tyre maintenance, insurance premiums and servicing costs. We also factored in some additional ad hoc expenses, such as parking, as well as a tracking device with stolen vehicle recovery services for additional peace-of-mind.
Cost of a car:
Fixed costs: R3 783,49 per month, worked out in the table below.
Variable cost assumptions: Petrol, maintenance and insurance included at the AA rate of R4,84/km.
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Suzuki S Presso 1,0 GL+
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Monthly repayment plus service plan (R175000 financed at 13% interest, 10% residual, 72 months)
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R3,444.49
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Other monthly costs such as parking
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R 200.00
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Comprehensive tracking and recovery service
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R 139.00
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Total
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R3,783.49
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Car ownership versus ride-hailing (distances and rates calculated from the Fourways area)
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Distance travelled
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Car ownership + AA rate
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Uber Go
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Uber X
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Uber Comfort
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(10km/workday x 2 directions x 21 workdays) + (10km/weekend day x 2 directions x 9 days) = 600km
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R3,783.49 + (600km x R4,84)
= R6,687.49
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R4,740.00
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R5,640.00
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R6,300.00
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(20km/workday x 2 directions x 21 days) + (10km/weekend day x 2 directions x 9 days) = 1020km
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R3,783.49 + (1,020km x R4,84)
= R8,720.29
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R7,092.00
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R8,706.00
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R9,660.00
|
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30km/workday x 2 directions x 21 days) + (10km/weekend day x 2 directions x 9 days) =1440km
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R3,783.49 + (1440km x R4,84)
= R10,753.09
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R9,738.00
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R12,108.00
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R14,406.00
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Using our example there can be upside to using e-hailing services if travelling up to 20km per day one-way. Personal circumstances will always vary, and you can test this out for your own specific travel scenario to determine your own logical tipping point. Our example used an entry-level vehicle costing R175,000. A more expensive vehicle choice would create a different tipping point, as would appetite around comprehensive insurance, fuel grade and maintenance regularity.
Additionally, after many monthly repayments and hurdling the residual payment curveball at the end of the financial journey, you would of course possess a paid-off vehicle, approaching a decade in age. That said, given the depreciation on cars, if the differential between ownership and e-hailing were to be saved monthly into an interest-bearing investment, you may well have a more financially substantial asset after several years than an aged vehicle.
Safety
Whatever your mobility choice, prioritise your safety and the safety of your fellow travellers.
A number of tracking service providers and insurers support driver and passenger safety through subscription to digital on-demand emergency services that can be activated via an app or phone call. If your safety is compromised, or in case of an emergency, ensure you have access to a roadside emergency service that will assist you with anything from a flat tyre to an accident, offer you towing assistance, and dispatch an immediate armed responder to your location to wait with you until your required roadside services arrive.
“However you choose to navigate the highways and byways of your hood, or further afield to keep in touch with your loved ones, or to explore our beautiful country, remember to be cautious at all times when travelling. Leverage services within your network of providers to enhance your safety,” says Duma Ngcobo, Chief Operating Officer at Tracker South Africa. “Focus on your driving and the situation around you. Even if you’re not driving, but rather hailing a ride, make sure you are climbing into the correct vehicle. Check the registration of the car and the identification of the driver. Consider sharing the vehicle and driver details, as well as your location and journey with loved ones.”
