Profitability of Investing in Rideshare Cars: A Driver's Perspective

Is it profitable to invest in a car and have drivers driving for you on platforms like Uber, Lyft, or Bolt? This article explores the reality based on personal experiences and insights into the costs, profits, and challenges faced by rideshare drivers in the greater Los Angeles metropolitan area.

Introduction to Rideshare Car Investment

The concept of investing in cars to drive on rideshare platforms might seem like a lucrative opportunity. However, it involves significant financial commitments and ongoing expenses. This article aims to provide an in-depth analysis of the costs, profitability, and potential risks associated with this investment.

Survey of Common Cars Used for Rideshare

An informal survey reveals that common cars used for rideshare services like Uber and Lyft include vehicles like the Mitsubishi Mirage, Toyota Prius, and Hyundai Elantra. Drivers often keep these cars for a few years before needing to replace them due to high mileage and wear and tear. While there is a market for leasing cars specifically for rideshare use, specializing in these particular models can offer some competitive advantages.

Cost Analysis: Gasoline, Maintenance, and Parts

Gasoline costs have significantly increased over the years. In mid-2017, gasoline cost approximately $3.30 per gallon, while current prices are around $4.75 per gallon, a 40% increase. This rise in fuel costs has a direct impact on drivers' earnings. Additionally, driver repair and maintenance costs have also risen dramatically. For example, in July 2019, a repair involving the timing belt, water pump, and idler bearings on a 2013 Kia Soul ($1009) nearly doubled to $2135 in 2021, reflecting a 102% increase over two years.

Depreciation and Mileage Considerations

The depreciation of rideshare cars is another crucial factor to consider. The 2013 Kia Soul mentioned earlier has over 145,000 miles on it. Vehicle depreciation is a significant cost, especially when you consider the high mileage driven by rideshare drivers. It is a common observation that the value of a rideshare car drops dramatically once it reaches 100,000 miles.

Wedging Out and Recouping Costs

With the high costs of maintaining and operating a rideshare car, drivers often go to great lengths to minimize expenses. Techniques like driving conservatively and maintaining the vehicle well can help, but they come with their own set of challenges. The phrase "drive like you stole it" captures the ethos of rideshare drivers who strive to maximize their car's longevity while ensuring it remains roadworthy.

Challenges of Hiring Other Drivers

Earning a decent profit in the rideshare industry is already challenging for individual drivers. Hiring other drivers to drive your rideshare cars is even less feasible due to the high wear and tear on the vehicles. The idea of "distance disrepair" is common among rideshare vehicles, where the car deteriorates faster than expected due to the vast miles driven. It would be nearly impossible to turn a profit with hired drivers who are likely to drive your vehicles into the ground.

Alternative Investments Explained

The article concludes with a strong recommendation to invest wisely. Given the high costs and low earnings, it is suggested that individuals consider alternative investments that offer better returns and lower risk. The examples of a 2013 Kia Soul's journey and the financial impacts highlight the need for a thorough analysis before making such an investment.

Understanding and analyzing the costs, depreciation, maintenance, and profitability of rideshare cars is crucial for anyone considering this venture. The rideshare industry, while lucrative for some, is fraught with challenges that must be carefully considered before making any significant investments.

Keywords: rideshare profitability, car depreciation, rideshare costs, rideshare maintenance