THE GAME CHANGER: UBER AS A CAR-OWNERSHIP ALTERNATIVE
Damodaran likely never considered this possibility: Could Uber reach a point in terms of price and convenience that it becomes a preferable alternative to owning a car? Farhad Manjoo wrote a compelling piece for the New York Times (“With Uber, Less Reason to Own a Car”) making just this argument. And Gregory Ferenstein at VentureBeat dove a little deeper in terms of the math of how this would work. According to Ferenstein, “AAA estimates that the average cost of car ownership per year is about $9,000.” If you take that number and divide it by your average Uber fare you can calculate number of rides you could afford a year, and compare that with what you need. For many, the math is already working. I know numerous people who have already given up their cars, and several people have anecdotally sent photos to Uber of the check they received for selling their car.
Some interesting demographic trends are also underway that favor Uber’s opportunity in this market. First, there is the continuing trend of urbanization in America. But more importantly, America’s youth have fallen out of love with the notion of owning a car. Kids are no longer rushing to obtain their license on the day they turn 16, and according to Edmunds, car ownership among 18-34 year olds has fallen a full 30% in recent years. Here are just a few of many articles published over the past two years on this topic: