The average car sits parked for 95% of its life. That statistic, first documented by transportation researcher Donald Shoup and confirmed across 84 cities worldwide by the UITP Millennium Cities Database, reveals a striking economic inefficiency at the heart of personal vehicle ownership. According to the 2022 U.S. National Household Travel Survey, the typical household vehicle is driven for just 64.6 minutes per day. For the remaining 23 hours, it occupies space, loses value, and generates costs.

Yet globally, car owners continue to absorb an average of $11,577 per year in ownership expenses (AAA, 2025), with depreciation alone accounting for 37% of that total. In markets like Dubai, where extreme climate conditions, high insurance costs, and rapid model turnover accelerate depreciation to 20–30% in the first year alone, the financial case for alternatives to ownership becomes even more compelling.

This analysis examines the full economic picture of car ownership versus rental, drawing on data from AAA, the U.S. Bureau of Labor Statistics, Bankrate, and regional market studies. It introduces a breakeven framework to help consumers, expats, and business travelers determine when renting is the more rational financial choice.

The True Cost of Car Ownership in 2025

Each year, the American Automobile Association publishes its Your Driving Costs study, the most widely cited benchmark for vehicle ownership expenses in the United States. The 2025 edition found that owning and operating a new vehicle costs an average of $11,577 per year, or roughly $965 per month. This represents a 5.9% decrease from the 2024 peak of $12,297, driven primarily by lower depreciation and declining fuel prices.

However, the headline figure masks important dynamics. When adjusted for inflation, the real cost of ownership peaked in 2023 and has since fallen approximately 10%, even as nominal costs remain over 20% higher than 2020 levels.

Annual Ownership Cost Trend

Year	Annual Cost (USD)	Monthly Cost	Change
2020	$8,698 (est.)	$725	Baseline
2022	$10,728	$894	+23.3%
2023	$12,182	$1,015	+13.6%
2024	$12,297	$1,025	+0.9%
2025	$11,577	$965	-5.9%

Source: AAA Your Driving Costs 2020–2025

Where the Money Goes

Understanding the composition of ownership costs is essential for meaningful comparison with rental alternatives. The AAA 2025 breakdown reveals that the largest expense categories are precisely those that rental eliminates for the consumer.

Expense Category	Annual Cost	Share of Total	Eliminated by Rental?
Depreciation	$4,334	37%	Yes
Insurance	$1,694	15%	Yes (included)
Fuel	$1,950	17%	No (renter pays fuel)
Maintenance, Repairs, Tires	$1,656	14%	Yes (included)
Finance Charges	$1,131	10%	Yes
License, Registration, Taxes	$812	7%	Yes (included)
Total	$11,577	100%	83% eliminated

Source: AAA Your Driving Costs 2025; MoneyGeek analysis

The critical insight here is that 83% of total ownership costs are fixed expenses that rental companies absorb into their daily rate. A renter effectively pays only for fuel and the rental fee, which bundles depreciation, insurance, maintenance, registration, and financing into a single, predictable amount.

The Hidden Costs Owners Underestimate

A 2025 Bankrate study found that beyond car payments, American drivers spend an average of $575 per month ($6,900 per year) on what the study calls hidden costs: insurance ($2,679/year), fuel ($1,440/year), maintenance and repairs ($1,392/year), and vehicle taxes and fees ($1,389/year). These hidden costs increased 3.1% from 2024 to 2025, outpacing general inflation.

The RAC in the United Kingdom has similarly documented that most motorists dramatically underestimate the true cost of running a car, particularly the impact of depreciation. Their research shows that the average UK motorist spends approximately GBP 5,000 per year, or roughly one-third of net income, on their vehicle.

Key Finding: Depreciation is the single largest cost of car ownership, accounting for 37–49% of total expenses across all major studies. A new vehicle loses an average of $4,334 in value per year. Most owners either underestimate or completely ignore this cost (RAC, AAA).

 

Car Ownership Costs in Dubai and the UAE

The economics of car ownership in the UAE differ meaningfully from Western markets due to several region-specific factors: extreme heat accelerates vehicle wear, the expatriate-majority population creates constant turnover in the used car market, and the absence of annual vehicle tax is offset by mandatory insurance, Salik toll charges, and high parking costs in commercial areas.

Annual Cost Comparison by Vehicle Segment

Expense	Economy (e.g. Corolla)	Mid-Range (e.g. BMW 5)	Luxury SUV (e.g. Range Rover)
Insurance	AED 1,500–2,500	AED 3,000–5,000	AED 5,000–8,000+
Salik Tolls	AED 1,200–3,000	AED 1,200–3,000	AED 1,200–3,000
Fuel (800 km/month)	AED 2,400–3,600	AED 3,600–5,400	AED 5,400–7,200
Maintenance & Repairs	AED 1,500–3,000	AED 3,000–6,000	AED 8,000–15,000
Registration & Renewal	AED 575–600	AED 575–600	AED 575–600
Parking (if not included)	AED 3,600–12,000	AED 3,600–12,000	AED 3,600–12,000
Estimated Annual Total	AED 14,000–25,000	AED 18,000–35,000	AED 30,000–51,000+

Sources: YallaMotor 2025; PersonalFinance.ae; DubaiLivin 2026

These figures exclude the purchase price and any financing costs. When depreciation is added, the total cost of ownership rises substantially.

Accelerated Depreciation in the UAE

Cars in Dubai depreciate faster than global averages. Research from multiple UAE market sources shows that a new vehicle typically loses 9–11% of its value immediately upon leaving the dealership, 20–30% within the first year, and retains only 40–50% of its original value after five years.

Vehicle Category	Year 1 Depreciation	Annual Rate (Yrs 2–5)	5-Year Retained Value
Economy (Toyota, Nissan)	15–20%	~15%/year	50–60%
Mid-Range (Honda, Hyundai)	18–25%	~15%/year	45–55%
Luxury (BMW, Mercedes)	25–35%	15–20%/year	30–45%

Sources: PitstopArabia; AlbaCars; FirstChoiceCars UAE; Octane Rent

Several factors unique to the UAE accelerate this depreciation. Extreme temperatures (regularly exceeding 45°C in summer) degrade paint, leather interiors, dashboard materials, and tire condition at a faster rate than temperate climates. Dubai’s expatriate population, which comprises over 80% of residents, creates a distinctive market cycle: many professionals live in the UAE for one to three years, purchasing a vehicle upon arrival and selling it at a significant loss upon departure. This constant influx of relatively new used vehicles suppresses resale prices across the market.

The April 2024 flooding event, the heaviest rainfall in 75 years, further disrupted the market. Insurance claims totaled AED 4 billion across more than 100,000 vehicles, leading to premium increases of 5–15% even for owners who filed no claims. Comprehensive insurance now ranges from AED 1,200 to AED 5,000 per year, with Dubai premiums running 12–18% higher than other emirates.

 

The Global Car Rental Market: Scale and Trajectory

The car rental industry has evolved from a travel convenience into a significant economic alternative to vehicle ownership. The global car rental market reached USD 129.66 billion in 2024 and is projected to grow to USD 300.03 billion by 2033, at a compound annual growth rate of 9.77% (ResearchAndMarkets, 2025).

This growth is driven by several converging factors: post-pandemic tourism recovery, rising vehicle ownership costs, urban density making car ownership impractical, and a generational shift in consumer preferences from ownership to access-based models. The leisure segment accounts for 56.21% of the market, while self-drive rentals represent 66.74% of total bookings (Mordor Intelligence, 2025).

Key Market Data

Metric	Value
Global market size (2024)	USD $129.66 billion
Projected size (2033)	USD $300.03 billion
Growth rate (CAGR)	9.77%
Leisure travel share	56.21%
Self-drive share	66.74%
Fastest growing segment	Long-term rentals (10.68% CAGR)
Fastest growing region	Asia-Pacific (10.71% CAGR)

Sources: ResearchAndMarkets 2025; Mordor Intelligence 2025; Future Market Insights

Notably, long-term rental agreements are the fastest-growing segment at 10.68% CAGR. Corporate buyers increasingly prefer the off-balance-sheet nature of monthly rentals, while individual consumers in congested metropolitan areas view car subscriptions as a practical alternative to ownership, bundling maintenance, insurance, and seasonal vehicle changes under a single monthly fee.

Dubai: Where Tourism Demand Meets Rental Infrastructure

Dubai’s tourism sector provides a strong structural foundation for the car rental market. The emirate welcomed a record 18.72 million international overnight visitors in 2024, an 8.7% increase from 2023 and 12% above pre-pandemic 2019 levels. In the first seven months of 2025, 11.17 million tourists arrived, representing a further 5% year-on-year increase.

International visitors spent approximately AED 660 billion ($179.8 billion) in Dubai during 2024. Western Europe (20%), South Asia (17%), and the GCC (15%) constitute the largest source markets. For these visitors, who stay an average of four nights, car rental represents the primary form of autonomous personal mobility, as tourists cannot register vehicles in the UAE without a residency visa.

 

The Generational Shift: From Ownership to Access

Consumer attitudes toward car ownership are undergoing a measurable shift, particularly among younger demographics. Data from multiple 2024–2025 surveys reveals a consistent pattern: younger consumers place less importance on vehicle ownership, are more cost-sensitive about vehicle expenses, and are more receptive to rental and subscription models.

Car Ownership Importance by Generation

Generation	Car Ownership Is Important	Difference from Boomers
Baby Boomers	69%	—
Generation X	66%	-3 pp
Millennials	62%	-7 pp
Generation Z	54%	-15 pp

Source: Statista Consumer Insights, U.S. survey of 10,000+ respondents, Jul 2023–Jun 2024

The Deloitte Global Consumer Tracker (2025) found that more than 70% of Gen Z consumers say they prefer access over ownership across consumer categories, including vehicles. Enterprise Mobility’s 2025 survey of 3,000 adults in the U.S. and U.K. found that Gen Z and Millennials are the most likely to rent cars at least monthly. When asked about barriers to car purchase, the top three responses were affordability (“I can’t afford the type of car I want,” 34%), high interest rates (31%), and maintenance costs (24%).

This shift is reflected in leasing behavior. Millennials accounted for 35% of all new car purchases in Q1 2025 (Experian Automotive), and EV leasing among millennials increased 45% year-over-year (J.D. Power, 2025). With the average new car price exceeding $48,000, leasing at $596/month versus financing at $748/month presents a meaningful cost advantage that aligns with preferences for shorter commitment periods.

Generational Trend: 54% of Gen Z and 62% of Millennials consider car ownership important, compared to 69% of Baby Boomers. Younger consumers increasingly view vehicles as a service to access rather than an asset to own.

 

Breakeven Analysis: When Does Renting Beat Owning?

The fundamental economic question for any individual or business is: at what point does the cost of renting a vehicle become lower than the cost of owning one? To answer this, we developed a breakeven framework using Dubai market data for a mid-range vehicle (purchase price approximately AED 120,000).

Fixed Ownership Costs (Paid Regardless of Usage)

Cost Item	Annual Amount	Daily Equivalent
Depreciation (20% of AED 120,000)	AED 24,000	AED 66/day
Insurance (comprehensive)	AED 3,500	AED 10/day
Registration & renewal	AED 600	AED 2/day
Parking (average, if not included in rent)	AED 6,000	AED 16/day
Total Fixed Costs	AED 34,100	AED 93/day

Variable Ownership Costs (Per Day of Use)

Cost Item	Daily Amount
Fuel (~50 km/day average)	~AED 20
Salik tolls (2 crossings)	~AED 10
Wear & maintenance (prorated)	~AED 15
Total Variable Costs	~AED 45/day

Total Ownership Cost per Day of Actual Use

The critical variable is how many days per month you actually use the vehicle. Fixed costs are incurred whether the car moves or not. As usage decreases, the per-day cost of ownership increases dramatically.

Usage Pattern	Fixed Cost/Day	Variable/Day	Total/Day	Monthly Total
Every day (30 days)	AED 93	AED 45	AED 138	AED 4,140
Weekdays only (22 days)	AED 127	AED 45	AED 172	AED 3,784
20 days/month	AED 140	AED 45	AED 185	AED 3,700
15 days/month	AED 186	AED 45	AED 231	AED 3,465
10 days/month	AED 279	AED 45	AED 324	AED 3,240
5 days/month	AED 558	AED 45	AED 603	AED 3,015

Car Rental Cost Comparison (Dubai, Mid-Range Sedan)

Rental Period	Rate Range	Effective Daily Rate
Daily	AED 100–200	AED 100–200
Weekly	AED 500–1,200	AED 71–171
Monthly	AED 1,500–4,000	AED 50–133

The Breakeven Point: For a mid-range vehicle in Dubai, ownership becomes more economical only when the car is used consistently more than 18–20 days per month AND the monthly rental alternative exceeds AED 3,500–4,000. For usage below 15 days per month, even daily rental rates produce comparable or lower costs than ownership, and monthly rental rates are significantly cheaper.

For luxury vehicles, the breakeven threshold drops further to approximately 10–12 days per month, because depreciation (25–35% in year one) and insurance costs are substantially higher, while the rental premium over economy vehicles is proportionally smaller.

For tourists and short-term expats (stays under two years), renting is almost universally the more rational financial choice. The combination of immediate depreciation upon purchase, transaction costs of buying and selling, and the opportunity cost of capital tied up in a depreciating asset makes ownership economically disadvantageous for temporary residents.

 

The 95% Problem: Why Idle Assets Demand New Economic Models

The economic argument for car rental as an alternative to ownership is fundamentally rooted in utilization rates. A privately owned car is among the most underutilized major assets a consumer can purchase.

Professor Donald Shoup of UCLA first documented this phenomenon in his seminal work The High Cost of Free Parking, using U.S. Department of Transportation data showing that the average American drives 73 minutes per day, leaving the vehicle idle for 95% of the 24-hour cycle. The RAC Foundation in the United Kingdom found an even higher figure: the typical UK car makes 18 trips per week at 20 minutes each, meaning it is parked for 96.5% of the time.

A comprehensive study by Paul Barter using the UITP Millennium Cities Database confirmed these findings across 84 cities globally, calculating that cars were parked an average of 95.8% of the time and in motion for just 1.02 hours per day.

If a consumer pays AED 34,100 per year in fixed ownership costs for a vehicle used 5% of the time, the effective hourly cost of ownership (excluding fuel and variable costs) exceeds AED 78 per hour of actual use. A rental vehicle, by contrast, generates costs only during the hours it is actively needed.

This utilization gap is the economic foundation of the global shift toward shared mobility, car-sharing services, and rental-based transportation models. It explains why younger consumers, who are more likely to evaluate transportation as a per-use cost rather than a fixed household expense, increasingly favor rental and subscription alternatives.

 

Conclusion

The economics of car use are more nuanced than most consumers recognize. While ownership provides undeniable convenience and on-demand availability, the full cost, including depreciation, insurance, maintenance, and financing, significantly exceeds what most owners estimate. In markets like Dubai, where extreme climate, high expat turnover, and elevated insurance costs amplify depreciation, the financial premium for ownership is even steeper.

Car rental has evolved from a niche travel service into a legitimate economic alternative to ownership, supported by a global market projected to reach $300 billion by 2033. The data shows a clear pattern: as ownership costs rise and consumer preferences shift toward flexibility and access-based models, the economic threshold at which rental becomes more rational continues to fall.

For individuals who drive fewer than 15–18 days per month, for temporary residents on one-to-three-year assignments, and for visitors in tourism-heavy markets, the breakeven analysis consistently favors rental. The private car’s 95% idle rate is not merely a curiosity of urban planning; it is a measurable economic inefficiency that rental and shared mobility models are increasingly positioned to address.

Methodology and Sources

This analysis draws on the following primary data sources:

Government and Official Statistics

• S. Department of Transportation, Federal Highway Administration: National Household Travel Survey 2022
• S. Bureau of Labor Statistics: Consumer Price Index, Consumer Expenditure Survey
• Bureau of Transportation Statistics: Average Cost of Owning and Operating an Automobile
• Dubai Department of Economy and Tourism: Annual Visitor Report 2024; Tourism Performance Report H1 2025

Industry Research

• American Automobile Association (AAA): Your Driving Costs Study, 2020–2025 editions
• Bankrate: Hidden Cost of Car Ownership Study, September 2025
• Experian: State of the Automotive Finance Market, Q3 2025
• ResearchAndMarkets: Global Car Rental Market Insights, Trends & Forecast 2025–2033
• Mordor Intelligence: Car Rental Market Size, Share & Report Analysis 2025–2030

Consumer and Generational Data

• Enterprise Mobility: On the Move Annual Mobility Survey 2025 (n=3,000, U.S. and U.K.)
• Statista Consumer Insights: Car Ownership Importance by Generation, 2024 (n=10,000+)
• Deloitte: Global Consumer Tracker – Ownership vs. Access Preferences, 2025
• D. Power: EV Leasing Trends, 2025

Academic and Foundational Research

• Donald Shoup, The High Cost of Free Parking (UCLA, car utilization data)
• UITP Millennium Cities Database: 84-city car utilization study
• RAC Foundation (UK): Spaced Out – Perspectives on Parking Policy
• S. Department of Energy, Vehicle Technologies Office: Vehicle Parking Statistics 2022

UAE and Dubai Market Data

• YallaMotor: Complete Guide to Car Ownership Costs in Dubai, 2025
• Shory: Car Insurance Cost Dubai 2025 Analysis
• ae: Yearly Cost of Car Ownership in Dubai and UAE, 2025
• PitstopArabia: Ultimate Guide to Car Depreciation in UAE
• AlbaCars: How Much Is My Car Worth in Dubai – 7 Key Factors

All cost figures are presented in nominal terms unless otherwise noted. Dubai rental cost ranges are based on published rates for economy and mid-range sedans from major operators as of Q1 2026. Depreciation estimates for the UAE reflect consensus data from multiple local market sources. The breakeven analysis uses mid-range estimates; individual results will vary based on vehicle selection, usage patterns, and negotiated rental rates.

 

Frequently Asked Questions

Is it cheaper to own or rent a car in Dubai?

It depends on usage frequency. Our analysis shows that for a mid-range vehicle, ownership becomes economically advantageous only when the car is used consistently more than 18–20 days per month. For usage below 15 days per month, monthly or weekly rental rates typically produce lower total costs, especially when depreciation is factored in.

How much does car depreciation cost in Dubai?

A new car in Dubai typically loses 20–30% of its value in the first year, with luxury brands losing up to 35%. After five years, most vehicles retain only 40–50% of their original purchase price. For a vehicle purchased at AED 120,000, first-year depreciation alone represents AED 24,000–36,000.

Why do cars depreciate faster in the UAE than in other countries?

Three primary factors accelerate depreciation in the UAE: extreme heat (regularly exceeding 45°C) damages paint, interiors, and mechanical components faster; high expat turnover means many relatively new vehicles constantly enter the used market; and strong consumer preference for the latest models suppresses demand for even slightly older vehicles.

What percentage of the time is a car actually used?

According to studies by Donald Shoup (UCLA), the RAC Foundation (UK), and the UITP Millennium Cities Database covering 84 global cities, the average privately owned car is parked approximately 95–96% of the time and driven for just 1 to 1.5 hours per day.

Are younger generations less interested in car ownership?

Data from Statista Consumer Insights (2024) shows that 54% of Gen Z consider car ownership important, compared to 69% of Baby Boomers. The Deloitte Global Consumer Tracker (2025) reports that over 70% of Gen Z prefer access-based models over ownership. Enterprise Mobility’s 2025 survey found Gen Z and Millennials are most likely to rent cars monthly.

How large is the global car rental market?

The global car rental market was valued at USD 129.66 billion in 2024 and is projected to reach USD 300.03 billion by 2033, growing at a 9.77% CAGR. The leisure segment represents 56% of the market, and long-term rentals are the fastest-growing segment at 10.68% CAGR.

Is renting better for tourists visiting Dubai?

For tourists, renting is the only practical option for personal vehicle mobility, as vehicle registration in the UAE requires a residency visa. With Dubai welcoming a record 18.72 million international visitors in 2024 and average stays of about four nights, short-term car rental provides the flexibility to explore attractions across the emirate’s 4,114 km² area without reliance on taxis or ride-hailing services.