Ride-Sharing Services May Be Burning a Hole in Your Wallet

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Ride-Sharing Services May Be Burning a Hole in Your Wallet

(Credit: Associated Press)

Ride-hailing services are a popular and convenient transportation option, but a new AAA analysis shows they are not a cost-effective replacement for vehicle ownership. According to the AAA Foundation for Traffic Safety, the average driver in an urban area – the only setting in which using these services are a practical full-time transportation option – drives 10,841 miles per year. While urban drivers travel fewer miles than those living in smaller towns or rural areas, relying on ride-hailing services as a primary mode of transportation would cost $20,118 annually. This equates to more than twice the cost of owning a personal vehicle, even when factoring in the expense of fuel, insurance, parking and the vehicle itself.

“Whether you own a vehicle or not, ride-hailing services are a convenient transportation option,” said John Nielsen, managing director, Automotive Engineering and Repair. “However, with the average American city-dweller driving nearly 11,000 miles per year, a personal vehicle is still the more cost-effective choice.”

For the study, AAA analyzed the costs of ride-hailing services (including the use of an occasional rental car) in 20 major urban areas. Based on the average number of miles traveled by city-dwellers, people living in Austin could pay as much as $19,821 annually.

According to data from AAA’s annual Your Driving Costs study, the average annual cost to own and operate a new vehicle, the costliest form of vehicle ownership, is $7,321 for 10,841 miles of travel annually. Understanding that parking costs can be a major ownership expense for those living in urban areas, AAA also analyzed the costs of flat-rate parking per year, which ranges from $706 (Phoenix) to $8,088 (New York), with an average cost of $2,728. For those with access to free parking, relying on ride-hailing services is nearly three times more expensive than vehicle ownership in these cities.

“For those who travel a very limited number of miles annually, or have mobility issues that prevent them from driving a personal vehicle, ride-hailing can be a viable and important option,” continued Nielsen. “But, for everyone else: the car is still king.”

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