Tuesday, April 18, 2006
The recent release of the 2006 AAA Cost of Ownership numbers prompted me to investigate a question that's been on my mind for a while - what is the crossover point where carsharing is more cost effective than car ownership?
For years we've said that carsharing was cheaper if you drive less than "7,500 and 10,000 miles per year". But as carsharing rates have crept upwards I've been suspicious that it might be lower. So I put together a spreadsheet that uses the AAA numbers to calculate the cost for various miles driven per year for both ownership and at several carsharing company rates. Since three major companies are operating in San Francisco, I used their rates for comparison and threw in Philly Carshare, to see how their unusual rate structure (very low mileage charge) compared.
Before sharing the results (and your opportunity to get a copy of the spreadsheet) let me mention that there a number of assumptions that go into making such a comparison - the big one being how you convert the miles driven per year into hours of carsharing. For this exercise I assumed a typical 5 miles driven per reserved hour. The second is deciding if any of the usage would be at discounted rates, such as using a vehicle on a daily rate, rather than hourly charge (I assumed that all trips would be hourly.)
So here what I came up with - including membership fees (any annual fees converted to monthly share):
1500 miles per year/125 miles per month
Zipcar - Extra Value 75* - $185.00 per month
Flexcar - Advantage 25 - $204.17
SF City Carshare - $165.00
Philly Carshare - $173.75
Monthly cost of car ownership - $431.00
5000 miles per year/417 miles per month
Zipcar - Extra Value 75* - $616.67 per month
Flexcar - Advantage 25 - $670.83
SF City Carshare - $526.67
Philly Carshare - $544.17
Monthly cost of car ownership - $454.42
For what it's worth, given my assumptions, the crossover point is about 3,800 miles per year. Keep in mind, even at 1500 miles per year this level of usage would make such a member a very good customer.
As someone once reminded me, most people talk about cost-effectiveness when they're looking for an excuse NOT to do something. After all, what is the cost-effectiveness of owning a BMW compared to a Chevrolet? Or even just owning a Chevrolet, for that matter (I'll bet Todd Litman at VTPI.org could answer that question!)
For those who just have to get their hands on the spreadsheet and play with it, send me an email and I'll send it to you. Use the link to the right to email me. Sorry, AAA does not put their brochure Your Cost of Ownership on the web. I used numbers from a Detroit News article at the LINK below.