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Car Ownership Costs on the Rise: Boon for Mobility on Demand?

Photo courtesy of Flickr user taberandrew (Creative Commons)AAA’s latest study on rising vehicle ownership costs reads like a case for adopting greener transit options such as more efficient vehicles, or flat-out deserting the ol’ personal car in favor of alternatives like car-sharing networks that often cover fuel, maintenance and insurance costs.

Taking into account license and registration fees, depreciation, insurance, finance charges, fuel, maintenance and other costs, AAA found that “owning and operating a typical sedan” climbed to about 56.60 cents per mile, or $8,487 per year, in 2009, based on 15,000 miles of driving in the year and gas priced at $2.60 per gallon. That’s a jump of more than $390 over AAA’s cost estimates in last year’s report.

Part of the cost increase stems from rising fuel prices, and AAA finds operating costs for owners of SUVs — some of the least efficient vehicles on the market — hit 73.90 cents per mile, or $11,085 over the year. For smaller sedans, AAA pegs the average annual cost of ownership at nearly $5,000.

But as AAA Northern California spokesperson Matt Skyrja explains in Thursday’s release, gas prices affect more than how much we pay at the pump. They also influence depreciation rates — over time, the more value that consumers place on fuel efficiency, the less you can expect to get for an old gas guzzler if you decide to sell it in the future. “With the growing appeal of more fuel-efficient vehicles,” Skyrja explains, “small sedans are experiencing less depreciation and holding their value longer. On the flip side, there are notable rises in depreciation costs with categories of less fuel-efficient vehicles.”

According to a report earlier this year from the research firm Frost & Sullivan, car-share networks like Zipcar and City Carshare are poised to see a boom in membership during the next several years. The number of drivers using these networks grew 117 percent between 2007 and 2009 in North America, and by 2016 the firm anticipates membership will reach 4.4 million in North America and 5.5 million in Europe.

Rising costs for owning and operating a personal vehicle can boost the appeal of car-sharing networks that roll the cost of fuel into membership and hourly or daily fees. At the same time car-share providers, could turn into decent-sized customers for automakers while driving a decline in personal vehicle ownership. The car-sharing firms are also some of the most active on terms of “fuel efficient, low emission, low priced, and trendy vehicles.” By Frost’s somewhat optimistic estimates, plug-in vehicles will make up one in every five new vehicle purchases for car-share fleets by 2016.

It’s not just car-share providers (of both the for-profit and non-profit variety) that are developing alternatives to personal vehicle ownership and the all-too-common single-occupant vehicle. A number of startups are working to take advantage of real-time data about location (see this GigaOM Pro report on Location: The Epicenter of Mobile Innovation) and the supply and demand for mobility to help people carpool. Put simply, these services identify and link passengers and drivers with empty seats that are nearby and planning to go in the same direction.

As Ryan Chin, a PhD candidate in the Smart Cities research group at MIT has told us (GigaOM Pro, sub. req’d), emerging models based on offering “mobility on demand” can help bridge what’s known as the “last mile” gap in many public transit systems. The idea is to provide access to, say, an electric car, scooter or bicycle when and where you need it, as well as the option to drop it off near your destination. In some models, companies operate the program in exchange for advertising space, while city governments provide land in exchange for the transportation service and a potential solution for traffic congestion.

These types of solutions can help slash greenhouse gas emissions from the transportation sector and reduce reliance on personal vehicles — while cutting the costs that go along with vehicle ownership. And as Chin commented, “There’s a lot of difficulty convincing automotive companies to adopt this model…that means there’s a big, huge opportunity for other players to come in.”

Photo courtesy of Flickr user taberandrew

9 Responses to “Car Ownership Costs on the Rise: Boon for Mobility on Demand?”

  1. Hybrid autos are comparatively less polluter than diesel and petrol autos. Carbon emission is lower .Dust particle emission is also lower. Most of all its low maintains cost, it will be the next generation automobile.

  2. That’s exactly my hypothesis- that new mobility schemes might facility the introduction of ,monovalent BEvs. But that will not happen without changes of the boundary conditions.
    The link to my site shows you a user questionnaire for the topic.