What makes a good ride-share car?

There's one important respect in which the cars used by ride-share contractors differ from the traditional models chosen by the taxi industry – resale potential.

After half a million kilometres, the typical taxi is basically shagged. It's worth little more than the sum of its parts and has probably been driven into the ground by uncaring drivers who don't own it.

But a ride-share driver is a different species of driver. He or she owns the vehicle, cares about it and probably uses it for personal transport when not on duty. Perhaps too, the ride-share car will be traded in on something newer within a time frame measured in years rather than decades.

So the ideal ride-sharing car is one that will withstand a level of punishment meted out by the typical fare-paying passenger and still provide some refinement for the off-duty hours.

Most importantly, however, it must provide service to the owner at relatively low cost. In other words, total cost of ownership (TCO) is an important consideration in the purchase of a vehicle by a ride-share contract driver.

An important factor that has some bearing on TCO for the ride-share driver is whether to buy new or used. In favour of buying new is the sort of after-sales support the customer receives from the car company and its dealer network.

"You do get a full manufacturer warranty – most are five years – but check on RedBook.com.au for up to date data," says RedBook general manager Ross Booth.

"Most manufacturers have capped-price servicing these days, and of course you get the latest safety and technology features and more than likely a more fuel-efficient vehicle than just a few years ago.

“You can also save thousands of dollars on a new car if you buy at the end of year sale in June or purchase a demonstrator."

That covers the servicing costs, but what about filling the tank? Many people mistakenly believe fuel economy is the primary factor in TCO. It's not, but it is important if the plan is to drive the car day in and day out as an income-earning 'tool of the trade'.

"A major consideration to look at is the fuel economy, which is improving for new cars, with hybrids proving a viable alternative," says Booth.

"Fuel economy is published in the vehicle specifications as a measure of litres of fuel used for every hundred kilometres driven. This is shown for different driving conditions – 'urban' is the inner city scenario, 'extra-urban' is for highway or freeway use, and combined is both, which tends to be the one we use for comparisons."

Where fuel consumption is concerned, hybrids enjoy a significant advantage over conventional cars – especially around town -- which is what makes them so popular with the taxi industry, and that is applicable to a transportation network company, as Booth explains.

"Let’s use the example of petrol and hybrid versions of the Toyota Camry Ascent Sport. The petrol version is rated at 7.8L/100km while the economy figure for the Camry Ascent Sport Hybrid is 4.2L/100km.

"If a driver does 600km a week and fuel costs $1.48 a litre, this would save the Hybrid driver $32 per week. That's nearly 50 per cent of the fuel cost. Bear in mind that hybrid cars can cost slightly more than petrol driven cars and historically depreciate faster."

Booth stresses that TCO is not just the purchase price and fuel economy, however. It also includes servicing costs and depreciation. No matter how cheap to buy, how frugal to run or how reliable the vehicle may be, its TCO will look costly if the resale value is in the toilet, come time to sell or trade in on a new model.

And, as a ride-share car, it will probably notch up a lot of kilometres over its years of service. That certainly won't help the resale value of the car.

"There is nothing like the new-car smell," says Booth, "but you pay for it, most notably in depreciation, when you eventually sell your car. Most cars drop in value at least 20 to 25 per cent in the first year of purchase.

"Other major costs are vehicle service and maintenance, insurance, potentially finance and fuel costs."

So the car's depreciation, as a percentage of the purchase price, can be reduced by buying a used model about 12 months old. A car that's a year old has already been through the highest rate of annual depreciation before you've bought it.

"A used car should enable you to save money up front; you just need to make sure the quality is in line with how much you are paying," Booth cautions.

"Buying from a dealer will give you a three-month statutory warranty and guaranteed ownership. The price from a dealer can be more expensive than buying privately via a website such as carsales.

"You can save considerable money buying privately. However, you need to ensure the quality is acceptable and the person selling you the car owns it."

And, of course, buying a used car that's under three years old will mean it's likely covered by the balance of the factory new-car warranty – which can be transferred to the second owner. Most mainstream brands now sell new cars with warranties of five years or more.

Having settled on buying lightly used rather than new, the next question for a ride-share operator is what specifically does he or she want in terms of packaging, specification and price?

If the driver plans to spend more time in the inner-suburban area, a small hatch or SUV that's cost-effective to run might be the preferred option.

If you think the city to airport run looks the go, maybe something larger, with a voluminous boot for the families heading off for their annual holidays. This could be a mid-size passenger car or SUV.

Ross Booth's recommendations are essentially limited to four cars.

"My number one pick would be the new Toyota Camry Ascent Sport Hybrid which costs only $2000 more than the equivalent petrol model," he says.

"In a smaller vehicle the Toyota Corolla – again Toyota reliability and cost base are market leading – is the right choice for some ride-share drivers, but choose the hybrid models and take the sedan over the hatch, which has a small boot.

"From an SUV perspective either a Kia Sportage or a Hyundai Tucson offers cost-effective servicing, high retained values and good reliability. The icing on the cake is the warranty: five years for the Hyundai and seven years for the Kia.

"If you want the three best car brands for ride-share drivers to shop, RedBook would recommend Toyota, Hyundai and Mazda."

RedBook provides a number of products and services including pricing valuation certificates; CarFacts, which indicates whether the car odometer has been rolled back, is an insurance write-off or under finance; and RedBook Inspect pre-purchase inspection.

RedBook is also a good place to start for researching the type of car you want by specification and pricing.

A good ride-share car should: