Maintaining a personal car is becoming more and more expensive, and there are several reasons for this. This is related to both the construction of newer cars and the increase in costs for various services, such as the cost of services and technical inspection. For this reason, various alternative car rental services are gaining more and more popularity.
Personal car – an increasingly expensive extra
High inflation and disruptions in supply chains, which we have been living with for more than a year, have also had an impact on the expenses for personal car maintenance. Many cars use specialized parts, some of which may be proprietary or exclusive to certain manufacturers, so their supply can be a problem.
Since we drive relatively old cars in Latvia, they often go out of service and we have to pay more and more for their repair, because the cost of labor and also car spare parts has increased. Although less used vehicles require fewer repairs and have longer service intervals than older models, they too are prone to wear and tear and advanced technology – sensors, cameras, sophisticated computer systems – can make repairs very expensive. Also, specific knowledge is needed to diagnose and repair this car, while there are not so many knowledgeable car mechanics. It is planned that the price of CSDD services will also increase in the near future, and, for example, the cost of technical inspection will increase by 10% on average. For these reasons, the personal car is becoming an increasingly expensive extra.
Since July of this year, amendments to the Vehicle Operating Tax and Business Light Vehicle Tax Law have entered into force, which affect the procedure for calculating business light vehicle tax. If previously the tax was calculated taking into account the volume of the car’s engine, then it will be calculated in accordance with the maximum power of the vehicle’s engine in kilowatts. Depending on the vehicle models owned by the company, these changes will increase the cost of the fleet of all companies more or less.
It should be noted that we use private cars very inefficiently – approximately 90% of the time they are idle, and SKDS data shows that 40% of residents of Riga and Jūrmala who have a driver’s license most often drive alone, while 38% of households have more than one car.
In the post-pandemic period, the cost of car insurance has also increased. “Despite the fact that over the last year the increase in auto insurance prices has leveled off and equaled the general market inflation, there is still relatively high average market inflation in this area. According to the data of the Central Statistics Office on the premiums of insurers KASKO and OCTA, since May 2021, inflation in transport insurance has reached 59.1%. The significant increase in prices was facilitated by the drop in the auto industry caused by Covid-19, which was observed more strongly in the first two years of the pandemic – in transport-related areas it exceeded the average drop by at least two and often even three times,” explains Oskar Martuzans, head of the Risk Insurance Group of the insurance company AON.
New car rental services on the market
As the cost of staying in a car increases, the issue of environmental protection becomes more relevant, and travel habits change, more and more new car rental services appear on the market in recent years.
Several years ago, the car sharing service became popular, especially popular among young motorists who live in the centers of large cities and choose to pay for a car only when they really need to go somewhere. As this service becomes more and more accessible, residents gradually choose to give up their personal car.
However, families who live further from the center, or who have active hobbies, or those who live outside cities where carpooling is not always available, need other solutions. For this reason, a new service has entered the market – car subscription, which provides much wider opportunities for citizens to give up their car. It works similarly to subscribing to different apps like Netflix, Spotify or Smart TV. As long as the customer pays a monthly fee for using the car, it is at his disposal. This service has several advantages.
“Usually, the monthly fee includes all costs related to car maintenance, repair, tire change and insurance, as well as 24/7 roadside assistance and a replacement car in case of an insurance event. This means that the customer does not have to worry about paying unexpected repair costs. The customer can freely choose the duration of the subscription, which can be from six months to several years, depending on the need, and then change the car to another. Cars of various brands and models are offered for subscription, so the subscribed car can be adapted to your lifestyle, for example, in the spring and summer season, when you plan to go out of town more often, subscribe to a bigger car, in autumn and winter, a smaller one, and it can also be adapted if the work is seasonal character,” he says Arvis EnĖelis, manager of MyBee in Latvia.
Using these new car rental services, the driver does not have to worry about the wear and tear of the car and its later resale. Also, the subscription service provider takes care of the technical inspection of the car, which can significantly save the customer’s time and worries. On the other hand, company managers do not have to spend time managing the car fleet, because the service provider takes care of all car maintenance.
Trends suggest that private cars will become much less in the future, as the demand for more environmentally friendly and cost-effective solutions will grow, further developing various car rental solutions, public transport and micromobility1.
1 https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/the-future-of-mobility-mobility-evolves
MyBee
2023-08-22 11:33:02
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