By car? Whose car?

Time for a follow-up to last week’s post in which I have promised to compare a total cost of owning a car to using someone else’s car. In my analysis I assume whenever possible I use a bike or public transport and stick to four-wheel motoring whenever most convenient. My calculations pertain to my driving habits only and do not factor in any psychological or emotional elements, these are just hard numbers.

1. My driving profile, which will serve a base for comparison.

I drive on average 10,000 kilometres per year, of which:

- 4,000 kilometres are long-distance travels around Poland and abroad, they break down into one fortnight-long trip and four weekend (3 days) trips,

- 3,000 kilometres are mid-distance journeys are Warsaw and in the vicinity, each on average 15 kilometres from home and back, around two times a week,

- 3,000 kilometres are business trips around Poland.

2. Total cost of car ownership

The basic component is depreciation. I could claim my 8-year-old car does not lose value much and thus distort the comparison but I won’t. I assume I buy a brand-new compact car for PLN 80,000, I look after it, the car has no accident and I can sell it after 15 years of good service with 150,000 kilometres on the clock for one-tenth of its original value (in 2016 I sold my Megane II after thirteen years and five months for 15% of my father’s Megane IV price). Since I do not intend to get rid of it after a few years, I don’t care about high market value loss in early years; therefore I make a simplifying assumption that the car depreciates linearly.

After I buy the car, I need to pay fees in local transport and motoring office. PLN 180.50 gets amortised into 15 years.

Over the first 7 years I insure the car against theft, self-caused accident and other damages. I believe the risk is not very high, so I choose an insurance plan with the highest deductibles, which gives me insurance premium of 2% of car’s market value which then gets allocated over 15 years. Depreciation schedule for calculation provided by a leasing company (percent of original value after X years):

- year 1: 77%,

- year 2: 65%,

- year 3: 56%,

- year 4: 48%,

- year 5: 41%,

- year 6: 35%.

Good to realise after six years your car is worth little more than 1/3 of which you have paid for it.

Third-party liability insurance, with my highest 60% discount for accident-free track record of driving. PLN 586 is the exact amount of T-P liability premium paid by me in November 2018.

Just in case in take out also ancillary insurance policies, with the latter being required by my employer. Also the actual prices paid by me 8 months ago.

Annual servicing involves a thorough inspection of the car’s condition, changing oil and filters as well as fixing up minor (cost below PLN 100) malfunctions. PLN 700 is very close to actual price paid by me in April 2019 at Renault Dyszkiewicz.

MOT, in Polish a technical inspection confirming a vehicle’s roadworthiness. Over 15 years it has to be done 12 times (after 3^rd, 5^th and each next year), therefore the expense of PLN 114 is averaged out over 15 years.

A brand-new car comes with one set of summer tyres. To drive 150,000 kilometres in Poland you need two sets of summer tyres and two sets of winter tyres. Three sets of tyres to purchase over a vehicle’s life, each setting you back PLN 800 (of reasonable quality, yet a bargain in low season hunted), allocated over 15 years.

The tyres need to be changed twice a year. I have no-frill tyres, but in vehicles with pressure sensors are change is more expensive. My father was charged PLN 118 in April 2019 for such service.

Odds and ends are insignificant expenses, such as car wash, light bulbs, liquid washer, wiper blades, air fresheners, cosmetics, etc. They add up to PLN 200 per year on average.

Planned (due to wear and tear) and unplanned (breakdowns) maintenance and repairs – the most debatable item. How have I arrived at the amount? I have summed up all my expenditures on my previous car (aged between 8 and 13 while I had it) and current car (aged between 5 and 8 while I have had it) and divided by 8 years of car ownership. I have arrived at PLN 1,860 per year and then I multiplied it by 11 and divided by 15 (I assume over first 4 years since driving out of factory the car does not require outlays due to wear and tear and defects are covered by manufacturer’s warranty).

Petrol – I here assume price of 1 litre of petrol is PLN 5.00 and the average petrol consumption is 7 litres per 100 kilometres (if I drive at reasonable speeds beyond town and very rarely get stuck in traffic jams, perfectly doable).

As mentioned at the beginning, I take business trips by private car, therefore I am eligible for mileage allowance of PLN 0.8358 per kilometre which is the money (free of income tax) my car earns for me.

I believe I have included all the costs. Have I forgotten about something?

3. What if I do not own a car, but still need to use a car in the same manner?

With business trips the private car is replaced with a company car borrowed from a workmate. No costs to bear, mileage allowance goes away!

For a longer holiday trip, I need to hire a compact car for a fortnight. I return it 15 days after picking it up and pay a charge of PLN 99 per day, nearly the cheapest rate for a car found via search-and-compare engine.

For the weekend trips, I hire a compact car to return it 3 days 4 times over year after picking it up and I am charged a higher rate of PLN 129 per day.

The rented cars need to filled up. However if I can safely assume my well-looked-after car with carefully run-in engine repays me with lower fuel consumption, a hire car’s engine’s condition would not be that good and it would consume one litre of petrol per 100 kilometres more.

Finally, travels around Warsaw. Long before setting out to write the post, I have made a calculation of how much my “average journey” would cost, had I used Innogy go. I assumed price per minute of driving at PLN 1.19 and price per minute of sitting at PLN 0.19. A journey composed of 25-minutes-drive, 2-hour parking (I cannot finish my journey beyond Warsaw), 25-minutes-drive would set me back over PLN 80, meaning over one year I would spend over PLN 8,000 on local travels. Seeing total lack of cost-effectiveness, I started asking Uber for quotations of 15-kilometre rides in the evenings or over weekends. The average quotations were between PLN 30 and PLN 35 per ride (Uber beats traditional taxis at night and beyond Taxi zone 1), so I assumed the cost of PLN 32 per ride, meaning there-and-back cost is PLN 64, this repeated 100 times a year, which squares with my pattern of local driving roughly twice a week.

Besides, I own a parking space in a garage beneath my flat, which I would own anyway, so I do not include the cost of it, but if I did not have a car, I could sublet it. As I have observed, people seldom appreciate merits of shielding their vehicles from elements of weather and the key factor shaping demand for parking lots in underground garages are problems finding an open-air free-for-all parking lot around. Sadly in my neighbourhood this is not a problem, besides in a nearby building a private investor has bought up several places in the underground garage and is still struggling to find tenants. I believe the maximum price I could get is PLN 140 per month (not a trouble to find a garage in Ursynów for PLN 150 at OLX or Gumtree) and the space would be rented for 11 out of 12 months, besides I pay a flat property rental income tax of 8.5%.

I leave the figures without comments, you should reach the conclusion yourself.