What a car actually costs per kilometre
Fuel is the cost people track and the smallest of the big three. Depreciation is the largest, and it never appears on any bill.
Ask someone what their car costs and they will quote mileage. Fuel is the only cost that arrives as a visible transaction, so it becomes the whole mental model — and it is rarely the biggest number.
The full accounting
A ₹10 lakh car, driven 12,000 km a year, over five years:
| Cost | Five-year total | Per year |
|---|---|---|
| Depreciation | ₹5,50,000 | ₹1,10,000 |
| Fuel, at 15 km/l and ₹100/l | ₹4,00,000 | ₹80,000 |
| Insurance | ₹1,25,000 | ₹25,000 |
| Servicing and consumables | ₹1,00,000 | ₹20,000 |
| Tyres and battery | ₹60,000 | ₹12,000 |
| Parking, tolls, cleaning | ₹90,000 | ₹18,000 |
| Loan interest | ₹1,40,000 | ₹28,000 |
| Total | ₹14,65,000 | ₹2,93,000 |
Over 60,000 km, that is ₹24 per kilometre. The fuel component is ₹6.70 of it — about 27%.
Depreciation is the main event
Cars typically lose 15 to 20% in the first year and 10 to 15% annually after that. A ₹10 lakh car is worth roughly ₹4.5 lakh after five years.
It never appears as a bill, which is why it is never budgeted. It is simply discovered at resale.
The comparison to cabs
At ₹24 a kilometre, a car makes sense at moderate to high usage. Below roughly 8,000 km a year, cabs at ₹20 to ₹25 per kilometre cost about the same with no capital tied up, no depreciation, no insurance and no parking.
The threshold is usage, not preference. Someone driving 4,000 km a year is paying a large fixed cost to avoid a similar variable one.
Calculate your running cost
Three decisions that move the number most
Keep it longer. Depreciation per year falls sharply after year five. A car held ten years rather than five roughly halves the annual depreciation cost, and this dwarfs any fuel efficiency difference.
Buy less car. Every cost in the table scales with the purchase price — depreciation, insurance, servicing, tyres, interest. A ₹7 lakh car does not cost 30% less than a ₹10 lakh car; it costs about 30% less everywhere, every year.
Pay less interest. A car is a depreciating asset financed with money that costs 9 to 12%. Borrowing more for a longer term means owing more than the car is worth for a large part of the loan.
Published by FinClamp. This guide is information, not financial advice — see the disclaimer.