Cost of ownership for a car

When deciding about buying a car I was comparing cost of ownership for my options. I travel about 50km to and fro every day for work. Data marketed by car makers is designed to improve their sales only. For instance they often give fuel efficiency in km per litre as a major feature. Customers tend to get the impression that a car with higher fuel efficiency will save them money. However, this may or may not be the case. Instead, one should consider the cost per km of running the car. This means that you need to consider more factors than just the price of fuel and fuel efficiency of your car, in addition to the total distance that you would be running the car in a year (or every day). Typically, for an objective comparison you should consider following major components:
  1. Price of fuel per unit, F
  2. Fuel efficiency of car (distance run per unit of fuel), E
  3. Cost of maintenance (e.g. replacing tyres, and engine oil etc.), M
  4. Cost of insurance, I
  5. Yearly distance run by the car, D
Total cost per km of running the car can be estimated as: C = (I + M + (D/E)*F)/D

Following table shows a sample comparison for two cars I was considering:
ParametersSuzuki Alto (Petrol)Skoda Rapid (Diesel)Remarks
Fuel efficiency (km/litre)2220As actual
Car value (approx. ₹)3200001000000As of October 2015
Yearly insurance (₹, approx. 1% of car value)320010000Taking average cost of full insurance.
Average maintenance cost (₹/km)0.4411.072Regular maintenance** plus cost of replacing tyres etc.
Fuel price (₹/litre)6546As of October 2015
Yearly travel (km)1500015000
Total running cost (₹/year)54133.1860580.00
Running cost per km (₹)3.614.04
** From www. cardekho . com/maruti-alto-k10/service-cost.htm

Most middle class families in India prefer buying a car that runs on diesel than on petrol. Main reason is that diesel is significantly cheaper than petrol (as of today diesel is about 30% cheaper). Cost of a car can be 10-20% more for a diesel variant of a given make and model (e.g. Suzuki Swift vxi versus vdi). Mileage of a diesel variant is typically 10-15% more than petrol variant of a given make and model. However, they often overlook the fact that maintenance costs of diesel variants is often higher than petrol variant.

Nevertheless, the main point is that when comparing your options for a car you will likely make a more informed decision by considering more factors than just the fuel price and fuel efficiency.


Comments

  1. I will keep that in mind sir. that's an interesting comparison you made there. :D

    ReplyDelete

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