Is Ride-Hailing More Cost-Effective Than Car Ownership?

Green fuel pump nozzle with drop oil.

AAA Foundation for Traffic Safety analyzes the costs.

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.

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“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, annual ride-hailing costs are as follows:

Atlanta            $17,741          Nashville        $26,397
Austin             $19,821          New York       $21,279
Baltimore         $19,917         Philadelphia    $23,201
Boston            $27,545          Phoenix          $17,436
Chicago           $22,020          Pittsburgh      $18,940
Cleveland         $20,091         Salt Lake City  $18,866
Dallas              $16,944         San Diego       $17,316
Denver            $20,434          San Francisco $21,972
Los Angeles     $17,951          Seattle            $23,951
Miami             $17,339          Washington, D.C.  $21,093

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.”

To determine the average number of miles traveled by a city-dweller, AAA’s analysis leveraged data from the AAA Foundation for Traffic Safety’s American Driving Survey.

AAA’s Your Driving Costs data served as the basis for all car ownership calculations, factoring in depreciation, fuel, maintenance, repair, financing, insurance, license, registration costs and taxes. Total cost of ride-hailing is based on data from 243,838 economy-level, single rider trips in 20 U.S. urban areas and does not factor in costs associated with carpooling or multimodal transportation options. On average, those using ride-hailing services spent an average of $13.15 per trip, spending 15.11 minutes and traveling 6.66 miles. Ride-hailing costs include the occasional use of rental vehicles for longer distance travel. Full methodology can be found in the study’s fact sheet.

As North America’s largest motoring and leisure travel organization, AAA provides more than 59 million members with travel, insurance, financial and automotive-related services.