Why owning a second car doesn’t really make much sense …

The title of my post says it all… Before we start, there are some assumptions to this statement.
The assumptions are as follows:

  1. Your are living in a Tier 1 / Tier 2 city in India which has decent Uber / Radio Cab connectivity (Have heard good things about Meru as well See Update 2 below).
  2. You use your car as much as an average person does – say about an hour or so a day.

Let’s pull out our calculators for this one…

Step 1: Determining the cost of ownership of a car in India

  1. Cost of a new car (average make): Rs. 5,30,000.00 (A)
  2. Lifetime of a car: 7 years (pretty decent estimate)
  3. Fuel expenses (considering diesel without inflation): Rs. 2,000 per month (on the lower side)
    Cost over 7 years: Rs. 1,68,000.00 (B)
  4. Car Insurance (considering Rs. 10k avg per year): Rs. 70,000.00 (C)
  5. Car Maintenance / Servicing: (Rs. 10k avg per year): Rs. 70,000.00 (D)
  6. Change of tyres (twice in 7 years @ Rs. 3,500 per tyre): Rs. 28,000.00 (E)

Let’s add all this up: Rs. 8,66,000.00 (T = A+B+C+D+E)
Cost of owning this car / day over 7 years: T / (365 x 7) = Rs. 338.94 per day.

Please note that these are fairly conservative estimates. The cost here will be somewhat higher due to:

  1. Rise in the cost of fuel over the years.
  2. Not considering the amount you may need to pay for parking in your society (going rate in Pune is 1.5L – 2.5L per spot)
  3. Not considering the loan that you probably need to take to buy a car @ 15% pa. (you will end up paying an additional 2L interest over a 7 year loan period).
  4. You may not want to get an average car but a more expensive one. (Add the difference in costs accordingly.)

(Adding these expenses will take up the cost of your car to about: 8.66L + 1.5L parking + 42K fuel inflation @ Rs. 500 extra pm + 2L for loan = Rs. 12.58L or Rs. 492 per day over 7 years)

What this means is that everyday your car is sitting in your garage, you are wasting Rs. 340.00 – Rs. 492.00 per day.

I am going to consider the case in which you need a second car for your spouse to go to work.
(My office is around 8 km from home and hence my fuel costs are Rs. 2k per month approximately. If it were further, fuel costs would go up accordingly)

Also, most folks I know – use their second car even more sparingly than this particular use case.

Step 2: Let us consider the alternative: Uber / Ola Cabs / Meru / Other Radio Cab Services (See Update 2)

This is what I would pay one way to travel from my house to work.

Uber - Pune 2014-10-08 00-02-17

So: Rs. 120 one way. Rs. 240 both ways per day.
Assuming that I don’t need to use my car to travel on the weekends (Sat, Sun) my expense turns out to be:

  1. Per week: Rs. 240 x 5 = Rs. 1,200.00 (W)
  2. Over 7 years: W x 52 weeks x 7 = Rs. 4,36,800.00
  3. Cost of travel per day (over these 7 years): Rs. 170 per day
    i.e. I will be saving 340 – 170 = Rs. 170 per day just by not buying a car and using Uber instead.

In addition to this, the benefits of Uber / Similar services (over driving your own car are):

  1. You don’t have to drive a car.
  2. You get a nice, air conditioned, chauffeur driven mini-sedan (UberX has Sedans).
  3. No worries of filling up fuel, getting your car insured every year (especially by the Insurance Revenue program), PUC, serviced and maintenance.
  4. No more driving around for hours – looking for parking.
  5. No worries about someone hitting / denting / scratching your car while driving / parking.
  6. You can use your travel time to catch up on that extra level of Candy Crush instead of cursing those taxi and rickshaw drivers.
  7. With a little pre-planning, you can use your other single car between yourself and your spouse in most occasions. Saving on money and the environment by carpooling.
  8. The extremely satisfying feeling that you get when you press a virtual button on your phone and a car magically appears in front of your door cannot be beat. The magic of technology!
  9. Let someone else worry about getting you through that rush hour traffic – while you sit comfortably behind playing Candy Crush.
  10. Did I mention you don’t have to drive a car anymore?

Isn’t this all worth it? Not only do you save 170 bucks a day (Rs. 62,000.00 per year), you pay only when you travel. So if your travel needs are more infrequent – say for example, you need a second car only 2 – 3 days a week, your costs will come down even further – to about 80 – 100 bucks a day (or 60-70% cheaper than owning a car).

Step 3: So what is the hold up?

Sigh… There always is a catch isn’t it?
In this case, there are a couple of them:

  1. Uber isn’t as widely available as I would like it to be – and this will still be in only Tier 1 / 2 cities for sometime.
    Most of the times, it takes me between 10-15 mins on an average to get a cab (after pressing a button on my phone).
    Depending on your address in Pune, it could take you longer (20-25m). So a little pre-planning is required. However for the popular areas (camp / Viman Nagar / Kalyani Nagar / Koregaon Park / Aundh / Station / Airport / etc. – cabs arrive in between 5 – 8 mins which is not bad at all).
  2. You would be dependent on public transport / rickshaws – incase Uber cars are not available tomorrow.
    So you cannot depend on them a 100% yet – but with a little pre-planning, you can get around it.

In the end, I believe it is a lifestyle choice – something that we are very interested in trying. The economies make sense and the convenience makes so much more sense. If only the service grows and has enough drivers – then we’ll be talking.

Step 4: Get your first ride free – on me – worth upto Rs. 300.00

Just because you have read this post so far, your first Uber ride is on me. The coupon for the Rs. 300 off is: ubersaurabhj

Download the App on your phone (search Uber on the App Store, Google Play Store or Windows Phone Store), sign up (most debit cards and all credit cards work), hit Menu > Promotion and enter this coupon.

Update 01 – 08-Oct-2014

Gaurav pointed me to two interesting resources related to my blog post:

  1. An interesting discussion on hacker news.
  2. A blog written by Sam Altman (in SF) with an excel sheet having the same thoughts as me.

Update 02 – 08-Oct-2014

I have added Meru as a viable option in my posts assuming their rates are at par with Uber. But I was quite surprised to see them substantially expensive. In Pune for example, their minimum base fare is 200 bucks compared to UberX’s 90 bucks. Also their price per km is 20 vs UberX’s 12. That won’t hold up to my earlier calculations.

Disclaimer:
This post may seem that it has been sponsored by Uber – but that isn’t the case. The level of service and convenience that these guys offer is giving us the first glimpses of “Transport as a service” – which we haven’t seen so far. A service which allows you to summon a ride at the push of a button gives you the ability to dream about getting rid of that vehicle you rarely use anyways and use your hard earned money smarter.

We are actually very serious about selling our second car and converting to Uber – so if you see any flaw in my plans / calculations, please leave me a comment so that I can rethink! Thanks :)

What happens if Flipkart Fails?

(Image courtesy Samrat Mazumdar)

Pritika and I were sitting at Marz O Rin today evening – biting into the delicious vegetable sandwiches and cheese burgers and discussing how a package that I ordered Monday morning from Flipkart, was sitting inside my car by Tuesday afternoon. Even though we have had a weird relationship, I am impressed – even today by the speed at which they deliver stuff – and the ease with which you can shop with them.(Our latest purchase needed to be returned due to a missing accessory. More on that experience in a later post)

The discussion moved onto how Flipkart was doing financially – and it is no surprise that they are literally burning through money.

They have raised a total of $540M till date and have about 5,000 employees. They are still to post a profit (breaking even will happen after a long time).
Online retail is such a business and even Amazon took 6-7 years before they posted a profit.

We started wondering what would happen if Flipkart shuts down…
Can it even happen? Will their investors let it?

I mean, things like this don’t happen immediately. Things slowly stop – categories start disappearing and eventually the news is announced.

Flipkart shutting down will actually be a huge blow to e-commerce in India. In Tier 1 and 2 cities at least, Flipkart is synonymous with online shopping.
They have actually brought online commerce to the masses in India and made people feel safer while typing in their credit card numbers in a website.

When Flipkart was raising its earlier rounds, every Tom, Dick, Harry (and their uncles) were starting e-commerce sites right, left and center.
Most of them have gone under.

It is really heartening to see every other e-commerce site – even the unknown seller on eBay – to come up to Flipkart’s level.

I have bought stuff from a dozen, different e-commerce websites – even sites with bad designs and broken code – but they always delivered.

I, for one, hope that Flipkart hasn’t bitten more than it can chew – which can happen with a company growing this fast.
It would be really sad to see them go as they are probably the closest we have to seeing a major win in the Indian Startup space.

What I think
If Flipkart shuts down, it will be a slight inconvenience to many people – but I feel that Flipkart has already done all the hard work in making us cynical Indians – open to online shopping. With Flipkart gone, people will just turn to other folks in the market – the eBays and Amazons and Infibeams for their online shopping fixes.

I feel, it will be a bigger loss to the Indian startup scene than the Indian eCommerce scene.

What do you think will happen if Flipkart shuts down?
Will it affect future e-commerce in India? Have they done all the hard work (in converting customers) for Amazon to swoop in and pitch their flag?

External Links:

  1. An interesting Forbes India article from a year ago.
  2. Sachin Bansal’s interesting reply to the article.
  3. Flipkart Staff Exodus
  4. The Amazon of India is — Amazon (added on 25-Oct-2014)

Cancellation Policies and Charges of Airlines in India

This post attempts to compare the change and cancellation policies of airlines in India. The airlines compared were: Air India, Spicejet, Kingfisher, Jet Airways, Indigo and Go Air.

I recently was to travel to Delhi and had to cancel my tickets two days ago due to some personal reasons and was shocked to see the latest cancellation charges.
They are literally daylight robbery!

My itinerary was as follows:

Pune to Delhi via Spicejet (2 people)
Rs. 9,374 (booked via GoIbibo)

Delhi to Pune via Indian Airlines (2 people)
Rs. 10,126 (booked via the Air India website)

I ended up paying the following (insane) cancellation charges:

  1. Spicejet: Rs. 950 x 2 = Rs. 1,900
  2. GoIbibo (I booked the Spicejet ticket with them): Rs. 250 x 2 (their cancellation charges) + Rs. 100 (credit card transaction charges) = Rs. 600
  3. Indian Airlines: Rs. 1,575 x 2 = Rs. 3,150 (the complete base fare)

A couple of years ago, we had cancelled some Spicejet tickets and they were Rs. 750 per ticket.

What really irks me is the way these guys are doing business. I think the bulk of their revenue comes from people cancelling their tickets.

  1. They haven’t flown me!
  2. They have 100% sold the ticket to someone else at a super high rate (PNQ – DEL is a very popular route) and made a profit on it. (Last minute tickets are super expensive)
  3. They have made Rs. 5,650 from me without providing any service.

If this is not day-light robbery, I don’t know what is!

As a result, I did some research and have put up a sheet of airline cancellation charges of all airlines in India – which you should take a look at before making your bookings in case there is a possibility of you changing your plans. This is a google spreadsheet and editable by all – so feel free to make changes incase you find new charges (these change regularly).

Table created on: 26th Aug, 2012 09:31 hours.
These rates might not be the same on the day you are viewing this. For (a possibly updated) excel sheet, see this:

https://docs.google.com/spreadsheet/ccc?key=0AuIgUE5wEdcRdHhZdFhTTVVfQ2g1cTZDZnU4UEliWmc&pli=1#gid=0

The following airlines had information on their website which I could easily come across (I have over 13 years of web experience and I did web design and usability for a living)

  1. Spicejet
  2. GoAir
  3. Jet Airways
  4. Jet Konnect
  5. Air India (had to use a google in:site search)
  6. Air India Express

Following airlines had to be called to learn about the rates:

  1. Kingfisher (no surprises here)
  2. KingfisheR Red
  3. Indigo

Important Tip
Also, what you must definitely do is – NEVER book from these travel websites. Because cancellation is a 50% more expensive affair with these guys having their additional charges. What you should do is use http://ixigo.com which does a fare comparison on the direct airline website and book the tickets from there.

In my experience, 95% of the times, the lowest fares are on the Airline website anyways.