Car or Cab (Part 1)?

Cost of car ownership in Lion City - the highest in the world. Right? But just how ridiculously high is it?

Discounting reasons like lifestyle and convenience, just a plain dollars and cents opinion, is there a justification to own a car here?

I have thought about this some time ago and felt that it might be interesting to compare cost of owning a car with the next best alternative - taking a cab. That means comparing the driving my own car versus costs of commuting via cabs only.

Since majority of folks who own cars are just using it to commute from home to office and around the island, I wondered if there could be a threshold distance between one's home and office, that if exceeded, would make owning a car financially more viable than taking a cab.

Such an 'academically' bo-liao (无聊) task can easily be accomplished with an Excel spreadsheet.

First I need to get my assumptions down. So here goes:

Assume a new 1.6L car that costs $50K, on a 7-year loan at 2.5%p.a.

The monthly fixed costs are estimated at $700 for installment, $80 for road tax, $123 for insurance (averaged from 5 years, without accidents), $300 for misc like parking, servicing etc.

Now for the variable, which is mainly gas expenses as a function of driving distance and engine efficiency. I started with $1.6 per liter for gas, 10km per liter for efficiency, a daily 40km (to and fro) commute between home and office. Assuming 20 work days per month and IF I don't go anywhere else (ie I got no life lah), the monthly gas comes up to about $130.

Summing all expenses gave me the figure of $1330 per month.

Now, the same total distance that I used above, if it was done completely via cab costs $496 approx. Again I assumed only peak hour surcharge and only no-life type of home-office-home commute.

With the model set up in Excel, I can iterate the distances for both car and cab costs and solve for a distance between home and office where cost of car = cost of cab.

What did I get?

Heh heh, a 1-way distance of 83km between home and office! FYI, Lion City is only like 40-something km from east to west.

Of course, nobody is that no life in Lion city, regardless how workaholic you are (cross my fingers). So this distance is definitely an unrealistic number. But it tells me that even if I factored in typical usage distances, I would still be like staying-in-PasirRis-working-in-Tuas, in order to balance car and cab costs.

Well, since I have the spreadsheet set up now, it's a matter of punching some numbers. But that's for another time...