Have you ever wondered how many kilometers you need to drive before your vehicle truly becomes worth it financially? Owning a car or bike isn’t just about the upfront purchase price—it includes fuel, maintenance, insurance, and other hidden costs.
When I purchased my first car, I was unaware of how much maintenance and insurance would contribute to the overall expense. A year later, I recognized that I needed to improve my planning to ensure my car was financially justifiable. Thus, I created a model that assisted me in making resale decisions without incurring any losses.
This guide will help you determine when your vehicle pays for itself and when it’s the right time to sell.
1. Key Factors in Vehicle Ownership Cost
Think of Total Ownership Cost like the total bill at a restaurant—it’s not just the cost of the food (purchase price), but also the tip (maintenance), drinks (insurance), and taxes (miscellaneous costs). Apart from purchase cost, vehicle ownership include four main components: Fuel, Maintenance, Insurance and other miscellaneous costs like depreciation, loan interest, parking fees etc.
Let’s analyze these costs in detail.
a. Fuel Cost Per KM
🔹 Formula: Fuel Cost Per KM = (Fuel Price per Liter) / (Mileage (KM per Liter)
📌 Example: If a hatchback gives 18 KM/L and petrol costs ₹100/L, , then fuel cost per KM = 100/18 = ₹5.6/KM . Below table gives an indicative view of Fuel Cost /KM for different vehicle types:
| Vehicle Type | Fuel Price (₹/L) | Mileage (KM/L )* | Fuel Cost Per KM (₹) |
|---|---|---|---|
| Hatchback (Swift, i10) | 100 | 18 | 5.6 |
| Sedan (Honda City, Verna) | 100 | 16 | 6.3 |
| SUV (Creta, XUV700) | 100 | 12 | 8.3 |
| Luxury Car (BMW, Audi) | 100 | 8 | 12.5 |
| Scooter/ Commuter Bikes | 100 | 45 | 2.2 |
| Sports Bikes | 100 | 22 | 4.5 |
| Premium Bikes | 100 | 18 | 5.6 |
b. Maintenance Cost Per KM
🔹 Formula: Maintenance Cost Per KM = (Annual Maintenance Cost) / (Annual KM Driven)
| Vehicle Type | Annual Maintenance Cost (₹) | Annual KM Driven | Maintenance Cost Per KM (₹) |
|---|---|---|---|
| Hatchback (Swift, i10) | 8,000 – 15,000 | 10,000 – 12,000 km | ₹0.80 – ₹1.25 |
| Sedan (Honda City, Verna) | 12,000 – 20,000 | 10,000 – 12,000 km | ₹1.2 – ₹1.67 |
| SUV (Creta, XUV700) | 15,000 – 30,000 | 10,000 – 12,000 km | ₹1.5 – ₹2.50 |
| Luxury Car (BMW, Audi) | 50,000 – 1,50,000 | 10,000 – 12,000 km | ₹5 – ₹12.5 |
| Scooter/ Commuter Bikes | ₹4,000 – ₹8,000 | 8,000 – 12,000 km | ₹0.5 – ₹0.67 |
| Sports Bikes | ₹10,000 – ₹20,000 | 8,000 – 12,000 km | ₹1.25 – ₹1.67 |
| Premium Bikes | ₹20,000 – ₹50,000 | 8,000 – 12,000 km | ₹2.5 – ₹4.17 |
c. Insurance Cost Per KM
🔹 Formula: Insurance Cost Per KM = (Annual Insurance Premium) / (Annual KM Driven)
| Vehicle Type | Annual Insurance Premium (₹)* | Annual KM Driven | Insurance Cost Per KM (₹) |
|---|---|---|---|
| Hatchback (Swift, i10) | 8,000 – 15,000 | 10,000 – 12,000 km | ₹0.80 – ₹1.25 |
| Sedan (Honda City, Verna) | 10,000 – 20,000 | 10,000 – 12,000 km | ₹1 – ₹1.67 |
| SUV (Creta, XUV700) | 15,000 – 30,000 | 10,000 – 12,000 km | ₹1.5 – ₹2.50 |
| Luxury Car (BMW, Audi) | 25,000 – 60,000 | 10,000 – 12,000 km | ₹2.5 – ₹5.0 |
| Scooter/ Commuter Bikes | 714 – 3,851 | 8,000 – 12,000 km | ₹0.09 – ₹0.32 |
| Sports Bikes | 1,366 – 7,365 | 8,000 – 12,000 km | ₹0.17 – ₹0.61 |
| Premium Bikes | 2,804 – 15,117 | 8,000 – 12,000 km | ₹0.35 – ₹1.26 |
d. Miscellaneous Costs Per KM (Depreciation, Loan, Parking, Toll Fees)
🔹 Formula: Miscellaneous Cost Per KM = (Fuel cost+ Insurance cost+ Maintenance cost) per KM x Conversion Factor
i. For 2 wheelers, Conversion factor is 7%.
ii. For Cars, conversion is 7-10% for non-luxury and 12% for luxury as they have high cost of depreciation.
e. Total Running Cost Per KM
🔹 Formula: Total Running Cost Per KM = Fuel Cost + Maintenance + Insurance + Miscellaneous
2. Calculating Break-even KM at which vehicle cost is recovered & Best Time to Sell
Let’s understand its calculation with a real life example of my car. Model Name: Tata Nexon (Petrol), Cost of Purchase: 12 lakhs, KMs driven: 10,000
Step 0: Calculate cost contributors
a. Fuel cost/km: Car gives Mileage of 16 Km/L and fuel Cost is 100 / Litre, then fuel cost per km = ₹100 ÷ 16 = ₹6.3/km.
b. Maintenance cost/km: Annual servicing or maintenance cost is ₹14300, then maintenance cost/km = 14300/10000= ₹1.43 /km
c. Insurance cost/km: Annual Insurance Premium is ₹13300 , hence insurance cost /km= 13300/10000 = ₹0.1/km
d. Miscellaneous cost/ km: There are factors like Depreciation, Interest on loan, Parking, toll etc, which contribute to this category. As per the market trends, for Sedan/Mini SUVs, the conversion factor is 8% Hence, miscellaneous cost/km = (6.3+1.43+1.33)*8%= ₹0.7/km
Step 1: Calculate the Total Running Cost
Total Cost = 6.3 (Fuel Cost/ km) + 1.43 (Maintenance Cost/ km) + 1.33 (Insurance cost/km) + 0.7 (Miscellaneous cost/ km) = 9.74 /km
Step 2: Determine target resale value
I plan to sell my car at 6 lakhs ( 50% of purchase price)
Step 3: Calculate Breakeven KM at which cost of vehicle is recovered.
Breakeven KM = (Purchase Cost – Resale value)/ Total Cost of ownership
= (1200000– 600000) / 9.74 = 61,601 KMs
Step 4: Determine ideal age to sell the car
Ideal Age = Breakeven KM/ Annual KMs driven
Assuming, that I would drive my car 11,000 KMs annually, Ideal age to sell= 61,601 /11000 = ~6 years
This means that I can sell this car after using it for 6 years provided the car is driven 11,000 kms annually and buyer is wiling to give 50% of purchase amount.
3. Conclusion & Next Steps
Understanding the total cost of owning a vehicle can help you make smarter financial decisions. Whether you’re planning to buy a car or sell one, knowing your breakeven point and ideal selling age can save you money in the long run.
| Type | Total Cost/Km | Purchase Cost (₹ Lakh) | Resale Cost (₹ Lakh) | Break Even KMs | Ideal Selling Years |
|---|---|---|---|---|---|
| Hatchback (Swift, i10) | ₹ 8.1 | ₹6 – ₹11 | ₹3 – ₹5.5 | 37,000-68,000 | 3.5-6 |
| Sedan (Honda City, Verna) | ₹ 9.7 | ₹12 – ₹18 | ₹6 – ₹9 | 62,000-92,000 | 5.5-8.5 |
| SUV (Creta, XUV700) | ₹ 13.6 | ₹15 – ₹30 | ₹7.5 – ₹15 | 55,000-1,10,565 | 5.0-10.0 |
| Luxury Car (BMW, Audi) | ₹ 28.0 | ₹50+ | ₹25+ | 89,000+ | 8+ |
| Scooter/ Comuter Bikes | ₹ 3.2 | ₹0.8 – ₹1.5 | ₹0.4 – ₹0.75 | 12,000-24,000 | 1.5-3.0 |
| Sports Bikes | ₹ 6.8 | ₹2 – ₹4 | ₹1 – ₹2 | 15,000-29,000 | 2.0-4.0 |
| Premium Bikes | ₹ 10.4 | ₹4 – ₹8 | ₹2 – ₹4 | 19,000-39,000 | 2.5-5.0 |
🚀 Want to calculate your own breakeven point? Try our free calculator , coming soon…
Got Any Queries or Feedback? Leave your comment below.