Monday, July 01, 2013
Whats the true cost of running a car?
Whats the true cost of running a car?
I have owned a Indigo Diesel sedan from Tata. Like all Indians,
the thought that always comes to mind is what would be the true cost of running
and owning a car? This question gains prominence in the background of companies
innovating on moving away from car ownership to pay per use models, as is
developing in many cities in the US.
I have been maintaining running accounts of all expenses and
the mileage log of my car for the past 10 years. Using this I have done the
calculation for the total cost per km for running the car in the past 10
years..
As a summary, I have run the car 92000 KM < low by
average> also I have had a more than a fair share of body and chassis work <
INR 270,000> which biases the cost
per KM .. the total /km cost comes to 11.50 which is way beyond what typically
people think of when buying a car, primarily because of the hidden effects of
depreciation, insurance and general maintenance and risks of ownership resulting
in repairs ? damage that are not apparent when buying a car.
As an exercise I also compared by Indigo with 4 models that
were available from around 2004 which were the city, IKon, and the optra from Chevrolet
to provide a baseline comparison of the costs entailed in running and owning a
car..
Salvage INR
|
165,000.00
|
450,000.00
|
165,000.00
|
450,000.00
|
insu %
|
3%
|
3%
|
3%
|
3%
|
New car INR
|
530,000.00
|
1,150,000.00
|
650,000.00
|
1,400,000.00
|
IGO
|
City
|
IKON
|
Chev/Optra
|
|
$ /km
|
2.43
|
5.00
|
5.00
|
6.00
|
Insu/Km
|
1.09
|
2.56
|
1.24
|
2.90
|
Depr/km
|
3.99
|
7.65
|
5.30
|
10.38
|
Maint /Km
|
0.98
|
0.98
|
0.98
|
1.00
|
Repairs
|
2.95
|
2.00
|
2.00
|
2.00
|
Total / km
|
11.44
|
18.19
|
14.52
|
22.28
|
Delta
|
0.00
|
6.75
|
3.08
|
10.84
|
Total 'thous
|
1,047.03
|
1,665.34
|
1,329.42
|
2,039.58
|
Delta 'thous
|
0.00
|
618.30
|
282.39
|
992.55
|
As the table Shows, the costs / km ranges from 11.50 < > 22.00 INR / km for the
models compared, possibly a indica or maruti 800 would have been out of bounds
of this range with most models falling in this range.
Personally the indigo has been a great car on mileage but
bad service resulting in higher than normal
repair costs. This also shows the reason why people fall for Maruti, Tata and now hyundai where the costs of maintenance and repair would be much lower than other brands, esp FORD and GM where i get to understand typical repairs and maintenance are considered very high < this fact i have not considered in my table above, giving them a fair chance showing maintenance low>
finally, the total cash out –flow over 10 years has been 10.5 Lakhs which though high, is still a saving of 2.8L over a petrol IKON and also reflects as 8 ½ thousand INR per month as a general budget for a person thinking about a car in-toto;
finally, the total cash out –flow over 10 years has been 10.5 Lakhs which though high, is still a saving of 2.8L over a petrol IKON and also reflects as 8 ½ thousand INR per month as a general budget for a person thinking about a car in-toto;
Based on this People buy a car should typically consider
their depreciation loss as the biggest factor while buying a car, after that is
the fuel advantage against depreciation loss and any additional repairs that
may accrue.. the second most important cost is repairs over a long period
repairs increase offsetting the depr advantage!
Some assumption and limitations in my calculation include
- Low running only 92K in 10 years, if this was higher then the variable /km cost would have been lower
- Some of the assumptions like repairs / maintenance on other models could be different by 0.50 <> 1.00 INR
- On the indigo , my car, costs have been based on actuals
