The Rise of the Rideshare Economy

The Rise of the Rideshare Economy

Ridesharing in action

Car sharing and rideshare business models have  seen an enormous rise in popularity in the last 12-24 months, particularly within the millennial generation. It is estimated that in 10 years from now approximately 1.5 million Australians will be partaking in car sharing or rideshare services, whether they are users of the service or car owners wanting to make some additional money on the side. What does this mean for you as a car owner or as someone looking into the benefits of owning a car? First of all, we must understand how car sharing and ridesharing models work and the difference between them..

Car Sharing – Who are Go-Get and Flexi-Car and How Do They Work?

Go-Get and Flexi-Car are currently leading the way of car sharing in inner city and urban areas. Unlike ridesharing services such as Uber, car sharing models provide cars to members for them to drive and utilise as they wish – sort of like short term rentals. These vehicles are used by multiple people at different times during the day.

So how does it work? For companies like Go-Get and Flexi-Car, users must pay an initial membership fee followed by a monthly subscription. As a member, users simply book a car outlining some of their desires (child seat, smoking friendly, air conditioned etc.) and the period of time they wish to use the car for. The cars are located in various stations throughout the city. When it comes to accessing the car some models require you to enter a 6 digit pin or swipe a card to unlock the car. The keys are located inside the vehicle. Users can then use the car for their outlined rented period. You pay per hour or per kilometre in many cases. Some companies require users to refill the fuel tank prior to returning the car while others provide you with a fuel card which you use during your rental period. Often insurance will also be included within your sign up and monthly fees.

Contrary to what many people believe, the cars cannot be used for one-way trips and must be returned to the original place which the car was first picked up. This factor is generally considered negative by users as one-way trips are now out of the question and if the place of pick up is taken then the user must contact the provider and notify them of where the car is now located.

Despite the many positives that car sharing services provide, the Australian community isn’t entirely receptive to the idea. As many love their own unique space and environment which is solely used by themselves rather than a car which has had a number of different drivers since the beginning of the day.

The Ridesharing Service: Uber

The most widely recognised rideshare service across the globe is Uber. For those unfamiliar with the service, Uber provides everyday drivers with the opportunity to make money using their own vehicle as a chauffeur service. Drivers are able to work on their own schedules, working as much or as little as they like. Their income is based on every trip which starts at the same flat rate amount (similar to taxis) and then increases with time and distance of a trip as well as service demand.

The requirements to become an Uber driver are:

– The driver must be over the age of 21
– The driver must operate a vehicle with a model year that must be no older than 2001 (or in some areas 2006)
– The driver must pass a background check

You pass all the requirements, you love the idea of working on your own schedule and now you’re just wondering how much you’ll be paid?

If Uber is your only source of income it will work as follows (this is an estimation/guide and varies based on income):

– 20% is allocated Uber Fees
– 16% will go towards expenses (fuel, cleaning, maintenance of the vehicle)
– 7% GST
– 5% income tax – 20% income tax if Uber is your second job
– This leaves the driver with approximately a 52% profit off every trip – 37% profit from every trip if Uber is your second job.

Between 2014 and the end of 2015 Uber had logged over 2.5 million rides in Brisbane alone, there is no doubt that this worldwide phenomenon will continue to grow in the coming years with its possible expansion beyond the city into more urban areas.

So What Does this all Mean?

As a perspective car buyer, would the availability of these services make you rethink that car purchase? If you lived in or around the city then it certainly gives you food for thought but if you like to get away for the weekend or live somewhat remotely then these services don’t really provide you with the convenience to completely negate the need for your own vehicle.

Should you stick it to your boss, quit your job and start driving for Uber? Probably not. With the exponential rise in Uber driver numbers the ability to make a living from simply driving means long hours and potentially dealing with some pretty intoxicated passengers.  

As time goes on, these services will be refined and provide consumers with more options and added convenience, however with new vehicles being more affordable than ever, the ultimate convenience of owning your very own vehicle does for now, make the most sense.

If you’re in the market for a new car either for private use or to participate in the rideshare economy, call Car Search Brokers today on 1300 650 890. They can source you the vehicle you’re after in a short time and can negotiate with car dealers on your behalf to get you the best possible deal.

Posted on May 9, 2017 in Blog