From soaring gas prices to increasingly expensive cars, how are NYC TLC drivers uniquely impacted by the current inflationary environment
Yesterday, I was going over some auto repair & maintenance bills and I had do a bit of a double take. The price of an oil change had gone up by about 40%+, the price of brake pad rotors had gone up 50%+, many other items were way more expensive vs. what my mental benchmarks were. My first thought was my long-time and trustworthy technician made a mistake, but on closer inspection of the repair bills there were no changes in labor rates (costs related to just the labor of doing a job), everything was related to the cost of parts (i.e., oil, rotors, etc.).
I follow markets and know inflation is in the headlines, but 40%? 50%?! I don’t remember anyone mentioning these figures, this seemed crazy.
I’ve also heard directly and through the TLC grapevine that many drivers are being squeezed by increasing gas costs, but had not really heard too many mentions of the increased cost of vehicle maintenance as an issue (at least as it relates to inflation). I decided to dig in more and found a few unique (i.e., more pronounced vs. general population) impacts inflation has on NYC TLC drivers.
Photo Credit: AAA
The increasing cost of gas, driven by increasing oil prices, is probably the most observable and obvious inflationary impact on NYC TLC drivers, who spend hundreds of dollars (sometimes in excess of $1,000) per month on gas. As the AAA data above shows, the cost of regular gas (87 octane) is up 47% from last year’s average. Yes, you read that right 47%! 😮 In other words if you were spending $120 per week on gas last year, like-for-like that figure is now $176 or a $56 per week increase (multiply that by multiple weeks and you get the point, it’s not insignificant).
Price of Oil (WTI) over the past year (Source: Business Insider)
What’s even more concerning? Gas prices may even go higher, especially if we have a colder winter here in NYC ❄️. Some economists even think oil can hit $100 a barrel, a level not seen since 2014 (for context oil was over $150 per barrel during the all-time high gas prices in 2008 shown in the AAA chart).
Higher gas prices are something drivers are probably going to have to deal with for the foreseeable future. In fact in Brazil, Uber’s largest market outside of of the US, the cost of gas has led many drivers to stay off the ridehailing platforms. I don’t think we are at that point YET where NYC TLC drivers will leave the for-hire industry due to gas prices, but it will lead many to contemplate hybrid or EV options. It could even lead some to embrace sedans again over SUVs.
While EVs could save drivers money (i.e., no gas, no oil changes & less moving parts) other concerns may cause NYC TLC drivers to hesitate:
- The lack of NYC charging infrastructure
- The initial cost and current selection of EVs
- The lack of a robust third party service & repair network for EVs
My guess is HYBRIDs, especially hybrid SUVs like the Toyota Highlander, may become increasingly popular over the next few years with TLC drivers (i.e., as EV infrastructure is built out).
Hybrid SUVs, like the Toyota Highlander shown above, may become increasingly popular with NYC TLC Drivers due to higher gas prices
Who could have thought investing in used cars would beat the stock market! Aren’t used cars supposed to be a DEPRECIATING 📉 asset, not an APPRECIATING 📈 asset. From the impact of Hurricane Ida (i.e. thousands of vehicles were totaled) to the global microchip shortage – new and used car prices are setting records. For example, the estimated AVERAGE transaction price for a light vehicle was $42,258 in June 2021. These dynamics will likely cause many NYC TLC drivers to keep their current cars longer, leading to more money spent on auto repairs and maintenance.
AIR Worldwide, a risk modeling and damage assessment firm that serves the insurance industry, estimates that insurers will pay out claims on more than 250,000 vehicles destroyed by the storm (Source: Kelley Blue Book)
Auto Repair & Services
As mentioned above, given record new and used car prices, NYC TLC drivers are likely going to hold on to their current cars longer. Going back to how this piece started and my higher than normal car maintenance bills, everything from increasing oil prices (i.e., oil changes) to global supply chain bottlenecks (i.e., part availability) is making it more expensive to maintain a car. Layer on to those dynamics, new technologies used in cars, be prepared to spend more on vehicle maintenance (Note: this doesn’t necessarily mean you’ll take more trips to the shop, they could just be more expensive) .
“Car technology keeps increasing, meaning there are more electronics in cars now than ever before, making them similar to drivable computers. All these technological advances are making cars safer and more reliable, capable of going longer without maintenance. The downside to this is that even though cars are becoming more efficient, they are also becoming more complicated to repair.” – My Auto Store
🤷♂️ Thanks, Do You Have A Solution?
While you may have found the above insight useful or confirmatory you might be wondering if I wrote this article just to ruin your day.
The good news (or at least we think it is 🌝) is this, our soon to launch site (AutoMarketplace) will be aimed at helping drivers (& fleets) save money on auto repair & services, from common vehicle maintenance to tires & car washes. Before starting AutoMarketplace, we operated a fleet company in NYC, registering over two million city miles. We learned many expensive lessons, but also developed automotive expertise.
From identifying trustable local auto repair providers to saving on parts to preventive maintenance, we managed to significantly reduce our operating costs (i.e., cost per mile). Experience and data helped inform more thoughtful maintenance spend.