Car Ownership Cost: What is the real cost of a car in 5 years? Know the complete details of petrol, service and insurance

Car Ownership Cost: Buying a new car is like a dream for many families, but most people take the decision just by looking at the showroom price. Actually the true cost of the car comes out in the next 5 years. Including petrol, servicing, insurance and other expenses, this can be much more than the showroom price. It is important to understand the ownership cost, so that the budget does not get spoiled and there are no regrets.

In this article, we will explain in an easy way how you can calculate the correct mathematics of petrol, servicing and insurance for the next 5 years. Understand with some simple steps and examples how important is not just the ex-showroom price but also the running cost. With proper planning you can save thousands of rupees. Know the complete method.

Calculation of Ownership Cost

While buying a new car, most buyers focus on ex-showroom price, EMI and on-road costs. But full accounting of ownership costs is often missed. Ownership cost includes fuel (petrol/diesel), regular servicing, insurance premium, wear and tear parts like tyre-brake, parking, toll and depreciation.

The average car owner in India drives 10,000 to 15,000 kilometers annually. In cities like Delhi this average is around 12,000 km. If you drive more, expenses increase; even if you drive less, fixed costs like insurance and servicing remain constant.

fuel cost

The first and biggest expense is of petrol. The average price of petrol in India in 2026 is around ₹ 95 to ₹ 105 per liter. This varies according to the city. In Delhi it is around ₹ 94-95, while in Mumbai it is more than ₹ 103. Suppose your car’s mileage is 15 km/litre and you drive 12,000 km annually.

So the annual consumption in liters will be: 12,000 ÷ 15 = 800 litres. Assuming ₹100 per litre, the annual petrol expenditure will be ₹80,000. In 5 years it will reach close to ₹ 4,00,000. If the mileage is 12 km/litre and the price is ₹ 105, then this figure can go up to ₹ 5,25,000. City traffic, AC usage and driving style may reduce mileage by 2-4 km/litre, so do real world testing. The easy formula for petrol calculation is-

• Annual km ÷ mileage × petrol rate = annual fuel cost

Multiply it by 5 for 5 years. Also estimate the increase in the price of petrol in the future. In the last years it has increased by 5-10% annually. Choosing CNG or electric variants can reduce these expenses significantly, but before buying the vehicle, also look at the starting price and charging infrastructure.

Servicing and Maintenance

The second important expense is that of servicing and maintenance. In new cars, many services are free for the first 2 years or 20,000-30,000 km. After that, service is required every 10,000 or 15,000 km. For example, the 5-year maintenance cost of a Hyundai Creta petrol could be around ₹20,000-25,000, while that of a Tata Nexon could be around ₹30,000-40,000. In hatchbacks like Maruti Swift, it can be even less, up to ₹ 15,000-25,000. This includes engine oil, filter, brake pads, air filter and labor charges.

Service interval in India is usually 10,000 km or 12 months (whichever is earlier). On average there can be 8-10 services in 5 years. The cost of each service varies from ₹ 3,000 to ₹ 8,000 depending on the model. Apart from this, the expenses of unpredictable repairs like tyre, battery, clutch or suspension also add up. Good servicing increases the life of the car and keeps the resale value good. Always get it done from an authorized service center of the brand, because getting service done from a non-authorized place during warranty may lead to claim rejection.

insurance expenses

The third big expense is that of insurance. Comprehensive insurance on a new car is expensive in the first year. Depending on the model and value, it can range from ₹ 10,000 to ₹ 25,000. Third party insurance is fixed by IRDAI. Up to 1000 cc ₹2,094 and up to 1000-1500 cc ₹3,416 and above ₹7,897 annually. Comprehensive adds own damage cover, zero depreciation add-on etc. From the second year onwards, No Claim Bonus (NCB) can start from 20% and go up to 50%, thereby reducing the premium.

5 year’s hefty ownership cost

Let us assume that you have purchased a hatchback, sedan or an SUV worth around Rs 8 lakh. In this way the cost for 5 years can be approximately Rs.

• On Road Price: ₹8 Lakh
• Petrol cost (12,000 km/year, 15 kmpl, ₹100/litre): ₹4,00,000
• Servicing + Maintenance: ₹30,000-50,000
• Insurance: ₹80,000-1,20,000
• Total Running Cost: ₹5,10,000 to ₹6,00,000 (except showroom price)

Apart from this, also add road tax, parking, toll and depreciation (40-50% value loss in 5 years). Overall, the actual cost of the car in 5 years can be 60-80% more than the showroom price.

How to do math right?

1. Determine your annual driving distance.
2. Consider the ARAI mileage of the car to be 10-20% less than in the real world.
3. Check local petrol rates.
4. Calculate the maintenance cost from the manufacturer’s website or service calculator.
5. Get premium quotes from insurance comparison sites.
6. Use an online TCO (Total Cost of Ownership) calculator.