As hourly car rentals, taxi-hailing apps and car-sharing services become more popular, some drivers are finding ownership unnecessary.
Robust public transportation and easy access to necessities, coupled with the high costs of everything from tolls to parking have long led to car-free living in places like New York, Singapore and many European capitals. But, emerging transport options — think Uber, Halo, RelayRides and Zipcar — are spreading to cities where having a car had been a near-necessity. At the same time, the cost of car ownership is rising. In the last year, maintenance costs in the United States for a vehicle rose 11.3%, while insurance premiums rose 2.7%, according to the American Automobile Association’s 2013 Your Driving Costs. The average cost to operate a vehicle in the US was $8,946 in 2012 and that figure is even in higher outside the US in expanding metropolises such as Shanghai and Sao Paolo.
All told, these developments have made the decision to ditch four wheels an easier one, even in cities where being car-free was nearly unthinkable in the past. And in the US, many people are driving far less than they have in the last six decades, according to a study released in May by the United States Public Interest Research Group, a liberal-leaning public policy research and advocacy non-profit. The study found that people age 16 to 36 drove 23% fewer miles on average in 2009 than they did eight years earlier, and the group expects that trend to continue.
Of course, living without a car can mean dealing with unexpected public transport problems and can require more route-planning. But there is a financial upside beyond ditching a car payment and other costs, said Manisha Thakor, a personal finance expert and founder of MoneyZen Wealth Management in Santa Fe, New Mexico. Since most car-free people pay out-of-pocket each time they need to get somewhere, it makes the transportation spending process a more conscious decision, Thakor explains.
Here former car owners share how they manage being car-free and save money in four cities:
There are few cities more associated with car-driving than Los Angeles, with its 527 miles of freeways. The city’s 3.9 million residents drive almost 2.5 million vehicles, according to the Los Angeles Department of Transportation. But earlier this year John Kisha, 65, president of Dandy Lion Hosting, a webhosting company, went car-free.
Why he did it: After four years of owning an ultra-compact Smart Car, Kisha realized his maintenance costs were rising, to an estimated $800 this year. Including insurance, gas and car payments, Kisha spent about $700 per month. When a Zipcar lot opened up nearby, he decided to switch gears. Los Angeles has a bus and subway system that works efficiently in some areas, said Kisha, who lives in West Hollywood. “My office and where I live is on the same bus line,” he said, adding that his commute time has not grown.
What he spends now: When Kisha has doctor’s appointments, he uses a city-sponsored medical transportation company for free. For taxis, he buys a booklet of coupons for $8 good for $40 worth of rides each month. If he travels overnight, Kisha rents from a traditional car rental company. He uses Zipcar to rent hourly for work appointments. Since ditching his car, he has not spent more than $350 on transportation each month, even though he rents a car two to four times per week.
Biggest hassle: The amount of planning ahead required. “It can be a bit harder to be spontaneous,” Kisha said.
Annual savings: $10,000, most of which goes toward long-term investment or travel.
Cabrils, a municipality of 7,000 people about 30 km from Barcelona, does not seem a likely place to live without a car. But, Jacobo Pedrosa, 30, a children’s app developer at LilyMedia, is one of a small but growing number of people living in smaller towns outside of Barcelona who are giving it a go.
Why he did it: In 2011, when Pedrosa’s five-year-old Renault needed heavy maintenance and required hours of work at about 40 euros ($51) per hour, he decided to sell. “I didn’t need to drive,” he said. Taxes for car ownership were already costly and he was spending about 2,000 euros ($2,587) on maintenance and 3,000 euros ($3,881) for gas each year. As a web developer he could work from home and didn’t need to drive to an office each day, and could walk most places around the seaside town.
What he spends now: Getting to Barcelona now requires a bus and train ride that costs 6 euros ($8). It takes an hour longer than driving and Pedrosa makes the trip at least once a week. Twice a month, Pedrosa rents a car for weekend outings and spends about 40 euros ($51), plus the cost of gas. Friends sometimes give him a lift to social gatherings, he said.
Biggest hassle: The time it takes to get to Barcelona to meet with clients.
Annual savings: 4,100 euros ($5,255), which he spends on other experiences, such as dining out and activities with friends.
Car ownership costs CAD$7,500 (approximately equivalent to USD) on average in Canadian cities such as Vancouver. Even so, most people still depend on their cars as the main form of transport in Canada’s cities. But for Brian Poole, 28, a nonprofit project manager and personal finance blogger, simple math led him to ditch his car.
Why he did it: After graduating from college in 2008 and landing his first job, Poole bought a used car for CAD$4,000. A year later he decided to do the math on alternate transport options. He realized he could cut his costs — more than CAD$400 per month on maintenance, gas and insurance -- in half by renting cars by the day. Poole sold his car in 2010. “It took me a while to come around to the idea that I didn’t need to have a car,” he said.
What he spends now: Poole now uses Modo Car Co-op, a Vancouver-based car share service that allows members to rent vehicles by the hour from other members. Poole also started using Car2Go, which allows customers to return rental cars in a different place than the pick-up location. For daily transit, he depends on a CAD$42 monthly bus pass and his bicycle. Poole’s total monthly transport budget is CAD$200, with about CAD$150 going toward car-sharing services. For groceries, he walks to local supermarkets, but doesn’t buy in bulk.
Biggest hassle: Booking a car on short notice. “If there’s not a car around, there’s not much alternative,” he said.
Annual savings: CAD$2,400, which now goes into retirement savings and other investment accounts.
In London, about 60% of people own a car, but Amalia Pacquola, 32, implementation manager at a financial firm, isn’t one of them — despite her slightly unusual transportation requirements.
Why she did it: After driving most her life, Pacquola moved to London from Australia six years ago. But the prospect of owning a car in a city known for its traffic jams was daunting. In a city where car-related expenses can top 20% of annual income -- gas prices are high and commuters pay a £10 ($15) daily congestion fee, for instance -- owning a car costs upward of £8,000 ($12,187) per year. Instead, she became a member of Streetcar, an hourly-rental service acquired by Zipcar in 2010. Pacquaola often makes large cakes for weddings and birthdays as a side hobby, and rents vehicles to transport the desserts.
What she spends now: In a typical month, Pacquaola spends £90 ($137) on public transport and £60 ($304) on hourly car rentals, which average £8 ($12) per hour, she said. Occasional taxis can cost £15 ($23) per trip. In the last three months, she’s rented a car every weekend, but said in a city like London that still makes more financial sense because of parking restrictions. “It’s a lot less stressful,” she said. On weekdays, she takes the Tube to work.
Biggest hassles: Having to adjust mirrors and seat when driving rental cars and not forgetting any personal items when she returns the rental.
Annual savings: £5,720 ($8,732), mostly used to travel outside the country for at least one long weekend per month.