Car owners generally fall into three camps – automotive enthusiasts, people who treat cars as status symbols and those who just need a hunk of metal to get them from point A to B.
If you fall in the last camp, you’re probably looking out for ways to reduce your transportation costs. After all, owning a car is expensive. An entry-level sedan could cost you RM100,000 over five years!
Luckily, it’s easier than ever to get around without relying on public transportation. The question is, does it make financial sense to ditch your car and Grab everywhere? Or should you sign up for a car subscription? Here’s how much it costs to own a car, compared to ride-hailing and car subscription services.
What is the cost of car ownership?
The cost of owning a car goes beyond your monthly loan commitment. You’ll also have to consider petrol costs, maintenance, road tax, insurance, parking, and toll charges.
Here’s an example calculation based on someone who buys a new Proton Persona. She has a relatively short daily commute, and only spends RM150 a month on petrol (according to a Malaysian Institute of Road Safety Research (MIROS) survey, respondents spent an average of RM329.67 a month on petrol, but we thought it might be fairer to use a lower figure, as someone with long commutes is less likely to use a ride-hailing service).
Some of the costs we’ve included in our calculations – such as maintenance, tyre replacements, road tax and insurance – only occur once a year or every few months, but we’ve spread them out to reflect their true monthly cost.
Car model: Proton Persona 1.6 Premium CVT (2020); RM54,600
| Monthly cost | Over the first five years | |
|---|---|---|
| Loan amount | RM942 | RM49,140 |
| Down payment | RM5,460 | |
| Loan interest 10% down payment, 3% p.a. and 5-year tenure | RM7,371 | |
| Petrol costs | RM150 | RM9,000 |
| Maintenance1 | RM51 | RM3,050 |
| Tyres2 | RM20 | RM1,200 |
| Road tax | RM7.50 | RM450 |
| Insurance3 | RM102 | RM6,145 |
| Parking | RM150 | RM9,000 |
| Toll | RM150 | RM9,000 |
| Total | RM1,572 | RM99,816 |
1 Based on estimates provided by https://www.proton.com/en/after-sales/service-maintenance
2 Assuming you change your tires every 2.5 years, based on RM150 per tyre
3 Assuming you qualify for the no-claim discount every year
Based on the example above, while your monthly loan commitment is only RM942, your total monthly cost of car ownership is RM1,572!
But what happens to your monthly costs once your car loan is completely paid off? Your cost of car ownership may fall to RM609 a month:
| Monthly cost | Over the next five years | |
|---|---|---|
| Petrol costs | RM150 | RM9,000 |
| Maintenance2 | RM67 | RM4,030 |
| Road tax | RM7.50 | RM450 |
| Insurance | RM64 | RM3,823 |
| Parking | RM150 | RM9,000 |
| Toll | RM150 | RM9,000 |
| Total | RM609 | RM36,503 |
What is the cost of ride-hailing?
What’s the cost of an average trip on a ride-hailing service like Grab? If you have a 10km commute to work, a GrabCar trip could cost you around RM15:
Cost per trip:
- Base fare – RM1
- Cost per km – 10km x RM0.80
- Cost per minute – 25 minutes x RM0.25
- Total = RM15.25
Assuming you take two trips a day for every working day, it could cost you RM630 a month. Perhaps you’ll also spend RM50 per weekend commuting. You’ll also have to fork out your own toll fees. On top of that, you’ll also have to pay extra if you want to travel during peak hours – let’s assume you take 10% of your rides during peak hours, incurring double the fare. To keep this estimate simple, we’ll assume these costs stay the same over five years:
| Monthly cost | Over five years | |
|---|---|---|
| Weekday commute RM15 x 2 trips x 21 working days | RM630 | RM37,800 |
| Weekend commute RM50 x 4 weeks | RM200 | RM12,000 |
| Dynamic pricing charges1 | RM83 | RM4,980 |
| Toll | RM150 | RM9,000 |
| Total | RM1,063 | RM63,780 |
RM1,063 a month is a lot of money to spend on transportation – but that’s still lower than the cost of ownership of a new car.
But these costs depends on the distance of your daily commute. If you live closer to work – say, less than 5km away – and only incur RM10 per ride without any toll charges, it could cost you RM420 to get back and from work every day. Add in RM200 for weekend commutes, and you’d be spending RM620 a month.
How much do car subscriptions cost?
Car subscriptions are relatively new in Malaysia. They’re an alternate way of ‘owning’ a car without having to actually buy one.
The way they work is simple. Each subscription platform offers a fleet of cars for you to choose from. You choose your car, choose a tenure, pay an upfront fee (which may be refundable), then pay a monthly fee. This monthly fee covers insurance, road tax and maintenance fees. You can also swap your car for another during your tenure for a fee.
There are three car subscription platforms in Malaysia – Flux, GoCar and Renault. Here’s an example of each platform’s pricing:
| Flux | GoCar | Renault | |
|---|---|---|---|
| Proton Perdana 2.0 (2015) | Proton Saga 1.3 Executive (2018) | Renault Captur (preowned) | |
| Upfront fee | RM1,616 | RM1,680 (refundable) | RM2,500 (refundable) |
| Monthly fee | RM1,200 | RM840 | RM1,299 |
| Tenure | 36 months | 36 months | 12 months |
| Mileage cap (for the cheapest plan) | 1,250km a month | 1,650km a month | 20,000km a year |
| Excess mileage fee | RM0.64/km | RM2.40/km | RM0.50/km |
| Total annual | RM16,016 in the first year; RM14,400 for each subsequent year | RM10,080 | RM15,588 |
Don’t forget that these costs don’t include your monthly petrol, parking and toll spending. For example, if you go for a RM1,200 monthly plan, spend RM150 for petrol, RM150 for parking and RM150 for tolls, you could be spending RM1,650 a month on transportation.
In the short term, a car subscription can be cheaper than buying a car, as you don’t have to put up a 10% down payment. Over the long term, however, you’ll probably end up paying more with a subscription.
The cheapest plans for each platform also impose a monthly or yearly mileage cap, but you can pay more to increase it (or pay an excess mileage fee). According to a MIROS survey, Malaysians drive an average of 28,184km a year (that’s 2,349km a month), so you may need to fork out for a bigger plan if you have longer commutes, or if you travel for vacations or visit your hometown often.
But car subscriptions aren’t really marketed to those looking for the most cost-effective automotive solution anyway. Instead, they’re best for those who want short-term flexibility, or those who want to ‘own’ a car without making large upfront payments.
Cost of car ownership vs ride-hailing vs car subscription
Based on the scenarios above, we pit car ownership, ride-hailing and car subscriptions against each other. Here’s how much they can potentially cost:
Annual cost of car ownership vs ride-hailing vs car subscription
1 Based on cost of ownership of a new Proton Persona 1.6 Premium CVT (2020); 5-year loan, 3% p.a.; inclusive of RM150 for petrol, RM150 for parking and RM150 for tolls
2 Based on RM1,063 spending a month
3 Based on average estimate of RM1,200 a month, including RM150 for petrol, RM150 for parking and RM150 for tolls
The takeaway from our comparison is that it can be generally more expensive to own a car, but only during its loan tenure. Once your loan tenure is paid off, owning a car can be cheaper than ride-hailing or a car subscription.
Cost of car ownership vs ride-hailing vs car subscription (over ten years)
1 Based on cost of ownership of a new Proton Persona 1.6 Premium CVT (2020); 5-year loan, 3% p.a.; inclusive of RM150 for petrol, RM150 for parking and RM150 for tolls
2 Based on RM1,063 spending a month
3 Based on average estimate of RM1,200 a month, including RM150 for petrol, RM150 for parking and RM150 for tolls
Over the entire ten years, ride-hailing can be cheaper than owning a car, but only if you have a short daily commute.
What factors should you consider?
Of course, these costs are highly subjective. The most cost-effective option for you will depend on these variables:
- Car cost. More expensive cars will incur a higher cost of ownership. If you opt for a cheaper car or a second-hand model, it could be more cost-effective to own a car.
- Car lifespan. How long do you intend to use your car? Car ownership is more cost-effective if you use your car for longer to avoid a new car purchase.
- Commuting distance. If you have a short daily commute, using a ride-hailing service could be cheaper than owning a car.
- Value of your time. Have a long daily commute, and hate wasting time driving? Using a ride-hailing service can make sense if you use the time you save on work that is important to you, or that can bring you income (assuming that you’re comfortable working in the backseat of a car). However, you’ll also have to balance that with the time spent waiting for your Grab car.
You can also plug in your details in this calculator, which can help you calculate whether it makes more financial sense to own a car or use a ride-hailing service. It’s intended for readers in the United States, but can be applicable for Malaysian readers too.
Which should you choose?
So which option makes the best financial sense for you? Generally, it can boil down to:
- Owning a car: if you have a long daily commute and you intend to keep your car for many years.
- Ride-hailing: if you have a short daily commute, or if value your time too much to spend it driving.
- Car subscription: if you only need a car for the short term, or if you want to change cars frequently.
That said, sometimes it’s not all about the money. Each form of commuting has its own non-monetary advantages. With car ownership, you have greater freedom to commute whenever you want, and you can travel comfortably with small children or elderly relatives. Ride-hailing frees you from having to spend time in traffic or looking for parking. Car subscriptions give you the flexibility to cancel if you change your mind, or choose a new car frequently. You’ll have to decide which is most important to you.
