I have been driving my car since 2011. Done around 30000 km in the last 6 years. My car gives around 10 to 17 km per hour, mostly averaging around 12 km per litre. The variation is due to different driving conditions - driving in city vs driving on highways. Max possible is around 17.5 km per lit - with ac. The petrol prices have varied from Rs 60 to Rs 80 per litre. My overall mileage cost per km would be around Rs 6 per litre. This is just an incremental variable cost of driving a distance of 1 km in my car. There are other fixed costs: Purchase price of the car, regular servicing, cleaning, insurance, tolls and parking.
The objective of this article is to find out the total cost per km.
The car is a WagonR Vxi, bought in 2010 by my father for Rs 4.3 Lakh. He was driving it for a few months before gifting it to me in 2011. For the calculation purposes, I am assuming I bought the car exactly 6 years before, at a price of Rs 4.5 Lakh. So far I have done 6 insurance renewals, and about 12 regular 6-month servicing. Insurance renewals started at around Rs 7000 and now I am paying around Rs 4k+.
The current selling price is around Rs 2.5 Lakh
So, let us breakdown the costs as on March 2017:
6 years opportunity cost of the price of car
Rs 4.5 lakh with interest for 6 years @ 8% pa : 7.14 Lakh (Conservatively assumed an 8% p.a)
Petrol Price - 30000 * 6 : 1.80 Lakh
12 services of around Rs 4000 each : 0.48 Lakh
Cleaning charges (approx Rs 400 per month) : 0.29 Lakh
Parking charges (approx Rs 200 per month) : 0.15 Lakh
Insurance (approx Rs 6000 per year) : 0.36 Lakh
Toll charges (approx Rs 0.8 per km) : 0.12 Lakh (considered only 15k km as highway driving with tolls)
Adding up, it is around Rs 10.34 Lakh
Reducing the current sale price of the car which is Rs 2.5 lakh (as got from carwale.com and cardekho.com)
Overall fixed costs = Rs 7.84 Lakh. I have not included in this around Rs 50k that I spent for the Karnataka tax and re-registration! That's an one off case with me, and should not be considered for a general calculation
This 7.84 Lakh is what I would have spent for the 30000 km that I have driven. This works out to be Rs 26 per km! I am actually much better off travelling in Ola / Uber within city which charges around Rs 15 - 20 per km. And, taking a inter-city taxi for long distances. They, with sedan ranges of car, usually charge around Rs 13 to Rs 15 per km.
I am incurring Rs 26 per km in addition to having responsibility of car servicing, periodic emission check, annual insurance renewal, mileage / air check etc (those monetary costs are included in Rs 26 per km - and not the mindspace in planning and following them through). More than all that, I was awake for all the 30000 km that I drove (otherwise, I would not have been doing these calculations) - which is a lot of time which I could have spent taking rest, sleep or reading books or any light-weight activity!
Though, the one and the greatest advantage is that I can take the car anywhere, any time I want. I am in a job with fixed timings, so I do not actually have much of freedom on taking the car anytime and add to that you need to be calculative of the traffic too and parking constraints within the city - that puts you off for most times. So, this great advantage is also open to questioning!
This Rs 26 per km cost is for an entry level segment car driving around 5000 km a year. The costs will be much higher as the price of the car goes up.
May be a shared ownership with mutually agreed usage time table can help drive down the cost.
Commercial view-point:
Then a question arise. Our own car is not profit-oriented. It is utility-oriented. How will a profit-oriented long distance service can afford to run at around Rs 15 per km? Look at the above calculation break-up. The major cost is the opportunity cost of the amount spent on the car. For a taxi service, his business is based on a model that, as he runs more km, he generates more revenue. So, the same fixed cost is divided by more number of kms. Toyota Etios may last for 6 years covering 300,000 kms. Divide the price of a Toyota Etios (9 Lakh) with opportunity cost for 6 years = Rs 14.28 lakh over 3 Lakh km = Rs 4.76. Diesel fuel cost is around Rs 4 per km. Add other costs around Rs 2 per km. So, roughly Rs 11 per km. If he charges Rs 15 per km, he may make a profit of Rs 4 per km. This is of course not a lot of money. And there will be an average km that he needs to do every month to at least break even - which depends on the price of the car.
The objective of this article is to find out the total cost per km.
The car is a WagonR Vxi, bought in 2010 by my father for Rs 4.3 Lakh. He was driving it for a few months before gifting it to me in 2011. For the calculation purposes, I am assuming I bought the car exactly 6 years before, at a price of Rs 4.5 Lakh. So far I have done 6 insurance renewals, and about 12 regular 6-month servicing. Insurance renewals started at around Rs 7000 and now I am paying around Rs 4k+.
The current selling price is around Rs 2.5 Lakh
So, let us breakdown the costs as on March 2017:
6 years opportunity cost of the price of car
Rs 4.5 lakh with interest for 6 years @ 8% pa : 7.14 Lakh (Conservatively assumed an 8% p.a)
Petrol Price - 30000 * 6 : 1.80 Lakh
12 services of around Rs 4000 each : 0.48 Lakh
Cleaning charges (approx Rs 400 per month) : 0.29 Lakh
Parking charges (approx Rs 200 per month) : 0.15 Lakh
Insurance (approx Rs 6000 per year) : 0.36 Lakh
Toll charges (approx Rs 0.8 per km) : 0.12 Lakh (considered only 15k km as highway driving with tolls)
Adding up, it is around Rs 10.34 Lakh
Reducing the current sale price of the car which is Rs 2.5 lakh (as got from carwale.com and cardekho.com)
Overall fixed costs = Rs 7.84 Lakh. I have not included in this around Rs 50k that I spent for the Karnataka tax and re-registration! That's an one off case with me, and should not be considered for a general calculation
This 7.84 Lakh is what I would have spent for the 30000 km that I have driven. This works out to be Rs 26 per km! I am actually much better off travelling in Ola / Uber within city which charges around Rs 15 - 20 per km. And, taking a inter-city taxi for long distances. They, with sedan ranges of car, usually charge around Rs 13 to Rs 15 per km.
I am incurring Rs 26 per km in addition to having responsibility of car servicing, periodic emission check, annual insurance renewal, mileage / air check etc (those monetary costs are included in Rs 26 per km - and not the mindspace in planning and following them through). More than all that, I was awake for all the 30000 km that I drove (otherwise, I would not have been doing these calculations) - which is a lot of time which I could have spent taking rest, sleep or reading books or any light-weight activity!
Though, the one and the greatest advantage is that I can take the car anywhere, any time I want. I am in a job with fixed timings, so I do not actually have much of freedom on taking the car anytime and add to that you need to be calculative of the traffic too and parking constraints within the city - that puts you off for most times. So, this great advantage is also open to questioning!
This Rs 26 per km cost is for an entry level segment car driving around 5000 km a year. The costs will be much higher as the price of the car goes up.
May be a shared ownership with mutually agreed usage time table can help drive down the cost.
Commercial view-point:
Then a question arise. Our own car is not profit-oriented. It is utility-oriented. How will a profit-oriented long distance service can afford to run at around Rs 15 per km? Look at the above calculation break-up. The major cost is the opportunity cost of the amount spent on the car. For a taxi service, his business is based on a model that, as he runs more km, he generates more revenue. So, the same fixed cost is divided by more number of kms. Toyota Etios may last for 6 years covering 300,000 kms. Divide the price of a Toyota Etios (9 Lakh) with opportunity cost for 6 years = Rs 14.28 lakh over 3 Lakh km = Rs 4.76. Diesel fuel cost is around Rs 4 per km. Add other costs around Rs 2 per km. So, roughly Rs 11 per km. If he charges Rs 15 per km, he may make a profit of Rs 4 per km. This is of course not a lot of money. And there will be an average km that he needs to do every month to at least break even - which depends on the price of the car.
