Depreciation is different from other types of cost as there’s usually no cash outflow associated with it until the time of sale.
BHPian buzzy_boy recently shared this with other enthusiasts.
The term depreciation has different meanings. At its core, it can be understood as the reduction in value of an asset/appliance over it’s lifetime.
If one has to analyse the cost of ownership of a car, normally, the following apply:
- Ex-showroom price
- Registration charges
- Road tax
- Fuel cost
- Maintenance cost
- Interest cost
- Testing, recertification, and related costs
- Tolls, parking, and other fees
- Cost of accessories
- Depreciation
Depreciation is different from other types of cost as there’s usually no cash outflow associated with it until the time of sale – ie: technically, you don’t incur depreciation cost until you either sell your vehicle, or until your vehicle reaches the end of its useful life.
Individuals (non-business entities) don’t usually think about depreciation until the time of sale. However, depreciation becomes relevant in the following scenarios too:
You want to buy a used car, and want to arrive at a fair value.
You made a mistake while buying a car, and want to replace it.
Your car is constantly giving you trouble, and you want to replace it.
You have a reasonably old car, and want to replace it due to frequent repairs.
Your circumstances change, and you need to change your car to better suit your current needs
The goal of this post is to collect information about how much depreciation cost Team BHP brethren is willing to pay.
So, if you have sold a vehicle (of any age) after 2010 please share the details in the following format:
- Make:
- Model:
- Variant:
- Year of manufacture:
- Year of sale:
- No of owners at the time of sale:
- KMs you added to the vehicle (KM at the time of sale – KMs at the time of purchase):
- Loss = OTR Price – sale price:
- Depreciation cost per KM = Loss / KMs:
This method of computing depreciation cost has a lot of drawbacks. For instance, we’ll just arrive at the nominal cost (vs real cost), and we’ll not consider time value of money.
However, this data will help interested folks to perform deeper analysis if they desire.
I’ll go first:
- Make: Ford
- Model: Aspire
- Variant: TDCI Titanium, manual
- Year of manufacture: 2017
- Year of sale: 2020
- No of owners at the time of sale: 1
- KMs you added to the vehicle (KM at the time of sale – KMs at the time of purchase): 50000
- Loss = OTR Price – sale price : 375000
- Depreciation cost per KM = Loss / KMs : Rs. 7.5
Here’s what BHPian DRPSREDDY had to say on the matter:
A good point to start from.
I was going through all the used car websites. Depreciation or resale value is a big scam.
When you buy a car, for say at 10 lakhs ex-showroom plus road tax and insurance and sell it after six years, normally you should be calculating depreciation on invoice price.
But the used car dealers calculate depreciation on, on the road price and that too at the price of the same car in the current on the road price. If the model changes then there is slight drop in price than later model. Eventually some cars turn up costlier than the then on-road price.
This is especially true in the luxury car market where even a 6 years old car that is supposed to loose 60% value at 5 years is still 30% lower than then purchase price.
Maybe huge used car market demand has a lot made brokers play the game of pumping up the prices.
Here’s what BHPian jthomas had to say on the matter:
I sold Seltos after 2.5 years to get a 7 seater. Here’s my details:
- Make: Kia
- Model: Seltos
- Variant: HTK G
- Year of manufacture: 2019
- Year of sale: 2022
- No of owners at the time of sale: 1
- KMs you added to the vehicle (KM at the time of sale – KMs at the time of purchase): 18500
- Loss = OTR Price – sale price: (had custom leather seats, steering wrap and cruise control installed seperately costing 40k) 11.45 + .4 – 9.4 = 2.45 lakhs
- Depreciation cost per KM = Loss / KMs : ₹13
Should we calculate Interest paid for loan?? If yes, then cost per KM jumps to ₹21.
Here’s what BHPian SoumenD had to say on the matter:
Here are my stats:
- Make: Maruti
- Model: Zen Estilo
- Variant:VXi
- Year of manufacture: 2010
- Year of sale: 2019
- No of owners at the time of sale: 1
- KMs you added to the vehicle (KM at the time of sale – KMs at the time of purchase): ~40000
- Loss = OTR Price – sale price: 3.65L(OTR in JH)+0.45L(road tax+re-registration in KA)+0.20L(New set of tires, reverse parking sensors & leather seat covers)-1.7L(Resale value) = 2.60L
- Depreciation cost per KM = Loss / KMs : Rs 6.5/km
I bought the car in Jamshedpur in 2010 and got it to Bangalore around 2014. Had to pay Road tax & re-register. Sold off in 2019 to get a Jazz CVT. Must say inspite of not being a popular model got a decent resale value at Honda while exchanging as the new owner paid exactly the same price(~1.8L) after few months.
Here’s what BHPian techcoze had to say on the matter:
Sold my Seltos after 1 year of ownership, made mistake of buying manual and moving to to automatic. Also considering Seltos facelift launch is around the corner, I believe this was right time to sell it since resale price would take big hit after facelift launch.
- Make: Kia Seltos
- Model: HTK+ D
- Year of manufacture: 2021
- Year of sale: 2022
- No of owners at the time of sale: 1
- KMs you added to the vehicle (KM at the time of sale – KMs at the time of purchase): 9000
- Loss = OTR Price – sale price : 1.25 lakh
- Depreciation cost per KM = Loss / KMs : Rs. 13
Here’s what BHPian lamborghini had to say on the matter:
This is an interesting thread, but a lot has changed in the markets in the last 2 years that impact depreciation:
- Popular cars have seen price hikes, so depreciation on a used car is relatively minimal. A friend recently sold his 2.x lakh driven Innova 2007 for some 3L – he bought it for 10L!
- BS6 and other norms have seen diesels attract a premium – we picked up our Tiguan for 33.5L on road in 2018, today a 2018 vintage Tiguan TDi is quoted at around 25-28L!
- Manufacturers have left / discontinued some products / have heavy discounts – some cars like Fords, or less popular cars like the S-Cross / Audi’s have more depreciation than their peers (Figo v/s Swift, S-Cross v/s Creta, Audi’s v/s Mercs, etc.)
Anyways, from our side:
- Audi A6 2.0TDi CBU
- Bought 2011, Sold 2021
- Price new: Rs. 55L
- Price Sold: Rs. 9.15L
- Annual Depreciation: 8.3% (over 10 years)
We replaced this with a pre-owned Lexus ES:
- 2019 Manufacturing & Registration
- 2021 Purchase as second owner
- Price New: Rs. 78L
- Price Paid: Rs. 55L
- Annual Depreciation: 14.75% (Over 2 years)
Keyword: BHPians share the total depreciation incurred on their cars