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Old 21st November 2022, 15:24   #1
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Default How much are you paying as depreciation?

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:
  1. Ex-showroom price
  2. Registration charges
  3. Road tax
  4. Fuel cost
  5. Maintenance cost
  6. Interest cost
  7. Testing, recertification, and related costs
  8. Tolls, parking, and other fees
  9. Cost of accessories
  10. 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
  1. You want to buy a used car, and want to arrive at a fair value
  2. You made a mistake while buying a car, and want to replace it
  3. Your car is constantly giving you trouble, and you want to replace it
  4. You have a reasonably old car, and want to replace it due to frequent repairs
  5. 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

Last edited by buzzy_boy : 21st November 2022 at 15:27.
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Old 21st November 2022, 15:37   #2
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Default re: How much are you paying as depreciation?

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.
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Old 21st November 2022, 16:03   #3
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Default re: How much are you paying as depreciation?

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
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Old 21st November 2022, 16:16   #4
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Default re: How much are you paying as depreciation?

Quote:
Originally Posted by jthomas View Post

Should we calculate Interest paid for loan?? If yes, then cost per KM jumps to ₹21
I had thought about it, but then decided to exclude interest cost because it could vary on a case by case basis depending upon the quantum of loan.

Similarly with insurance, depending upon the history of the owner, and the cover opted for, the actual premiums could vary.
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Old 21st November 2022, 17:36   #5
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Default re: How much are you paying as depreciation?

Make: Maruti Suzuki
Model: A-Star
Variant: Vxi Automatic
Year of manufacture: 2011
Year of sale: 2015
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): 16400
Loss = OTR Price - sale price: 5,04,000 - 1,60,000 = 3,44,000
Depreciation cost per KM = Loss / KMs : 20.97, so basically 21

Now that this is done, I must mention my car was heavily flood affected in the 2015 December floods of Chennai, and thus declared a total loss by insurance. Thus the sale price reflected is the IDV value of the car at the time.
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Old 21st November 2022, 17:40   #6
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Default re: How much are you paying as depreciation?

Do all really pay? I have seen Innovas and Fortuners on sale in Bangalore for more than their original sticker price when new, even after running 30-40 thousand Kms.
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Old 21st November 2022, 17:47   #7
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Default re: How much are you paying as depreciation?

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.

Last edited by SoumenD : 21st November 2022 at 18:08.
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Old 21st November 2022, 18:03   #8
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Default re: How much are you paying as depreciation?

Quote:
Originally Posted by Superleggera View Post
Do all really pay? I have seen Innovas and Fortuners on sale in Bangalore for more than their original sticker price when new, even after running 30-40 thousand Kms.
They might be (in real terms). 10 Lakhs in 2015 is more valuable than 10 lakhs today due to inflation.

Innovas and Fortuners maybe exceptions due to their high desirability in the used car market. Similarly, there are limited editions of super cars that always appreciate in value.
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Old 23rd November 2022, 09:01   #9
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Default re: How much are you paying as depreciation?

We need to adjust for inflation along with the interest factored in to find the real quantum depreciation.

I bought my car for 6L and might get 2L when I choose to sell it off. What the 2L could buy on the day of purchase must get compared to what it would cost to buy the same on the day of purchase and that difference in value could be taken as the real cost of depreciation.

Last edited by COMMUTER : 23rd November 2022 at 09:02.
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Old 23rd November 2022, 09:19   #10
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Default re: How much are you paying as depreciation?

Here are my stats :

Make: Toyota
Model: Etios Liva
Variant: Vx
Year of manufacture: 2011, bought used in 2019
Year of sale: 2022
No of owners at the time of sale: 2
KMs you added to the vehicle (KM at the time of sale - KMs at the time of purchase): 106500 - 72500 = 34000
Loss = OTR Price - sale price: Rs 2,40,000 - Rs 1,87,500 = Rs 53,500
Depreciation cost per KM = Loss / KMs : 53,500/34,000 = Rs 1.57

Obviously not accounting for inflation here but nevertheless, a good deal.
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Old 23rd November 2022, 09:53   #11
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Default re: How much are you paying as depreciation?

Great thread. Added another data - Depreciation % per year = ((OTR - Sale price)/OTR) * 100%

Make: Hyundai
Model: i10
Variant: Magna Manual 1.2 kappa
Year of manufacture: 2009
Year of sale: 2014
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): 48000
Loss = OTR Price - sale price : 5.2Lakhs - 2.6Lakhs = 2.6Lakhs
Depreciation cost per KM = Loss / KMs : Rs. 5.4/km
Depreciation %/year = 10%/year


Make: Hyundai
Model: Verna
Variant: SX CDRI 1.6 Manual
Year of manufacture: 2014
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): 1,25,000
Loss = OTR Price - sale price : 12lakhs - 4.5 Lakhs
Depreciation cost per KM = Loss / KMs : Rs. 6/km
Depreciation %/year = 7.8% / year
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Old 23rd November 2022, 11:29   #12
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Default re: How much are you paying as depreciation?

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

Last edited by techcoze : 23rd November 2022 at 11:31.
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Old 23rd November 2022, 11:37   #13
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Default re: How much are you paying as depreciation?

Interesting thread.

Make: Skoda
Model: Laura 2.0 TDi CR
Variant: Elegance
Year of manufacture: 2010
Year of sale: 2017
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): 183000
Loss = OTR Price - sale price: 16,50,000 - 3,50,000 = 13,00,000
Depreciation cost per KM = Loss / KMs : Rs. 7.1/km

Make: Fiat
Model: Punto
Variant: 90HP 1.3 Multijet
Year of manufacture: 2011
Year of sale: 2017
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): 120000
Loss = OTR Price - sale price: 7,50,000 - 3,00,000 = 4,50,000 (if memory serves me right)
Depreciation cost per KM = Loss / KMs : Rs. 3.75/km

Ideally speaking a car depreciates to about 50% of its original ex-showroom value in 3 years time. 1st year - 20%, 2nd year - 35%, 3rd year - 50% and so on. This is a thumb rule I used to follow (post pandemic it has gone for a toss though). But this purely depends on the marque and its demand in the market. for eg. Brands like Toyota for their Innova and fortuners have absolutely no logic for the resale values, and the same goes for big brand cars although here it's inverse.

Last edited by samyakmodi : 23rd November 2022 at 11:44.
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Old 23rd November 2022, 12:01   #14
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Default re: How much are you paying as depreciation?

Quote:
Originally Posted by COMMUTER View Post
We need to adjust for inflation along with the interest factored in to find the real quantum depreciation.
Agreed. However, indexation is too complicated for the purpose of this thread. The data shared could be used for indexation if desired.
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Old 23rd November 2022, 12:22   #15
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Default re: How much are you paying as depreciation?

Make: HYUNDAI
Model: GETZ
Variant: GLE PETROL
Year of manufacture: 2006(BOUGHT 2009)
Year of sale: 2013
No of owners at the time of sale: 2
KMs you added to the vehicle (KM at the time of sale - KMs at the time of purchase): 14000(48000-34000)
Loss = OTR Price - sale price: 1.00,000(BOUGHT 280000 SOLD 180000)
Depreciation cost per KM = Loss / KMs : RS.7

Make: HYUNDAI
Model: I20
Variant: SPORTS DIESEL
Year of manufacture: 2013
Year of sale: 2018
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): 85000
Loss = OTR Price - sale price: RS.550000
Depreciation cost per KM = Loss / KMs : RS.6.47

Make: HYUNDAI
Model: I10
Variant: sports automatic
Year of manufacture: 2009(BOUGHT 2016)
Year of sale: 2019
No of owners at the time of sale: 2
KMs you added to the vehicle (KM at the time of sale - KMs at the time of purchase): 16000(62000-46000)
Loss = OTR Price - sale price: 1.30,000(310000-180000) (vehicle developed actuator problem requiring 1.2L for gearbox repair)
Depreciation cost per KM = Loss / KMs : RS.8.125
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