Variable with mileage
Fuel/electricity, some tyre wear, mileage-linked servicing and some maintenance.
How to compare the real running cost of two cars
Fuel or electricity is only one line in a vehicle budget. For a keep/change or petrol/EV decision, depreciation and fixed ownership costs can dominate the answer.
Reviewed 6 September 2026UK units unless statedCalculations and assumptions shown
Separate variable and fixed costs
Mostly fixed each year
Insurance, vehicle tax, breakdown cover and some servicing.
Capital cost
Depreciation or the change in vehicle value over the comparison period. Finance interest is separate from depreciation.
Worked annual comparison
| Annual cost | Car A | Car B |
|---|---|---|
| Energy/fuel | £1,650 | £700 |
| Insurance | £650 | £850 |
| Tax — illustrative input | £200 | £200 |
| Servicing/maintenance | £650 | £450 |
| Tyres/other | £350 | £450 |
| Depreciation | £1,500 | £3,500 |
| Total | £5,000 | £6,150 |
In this example the cheaper energy does not make Car B cheaper overall because the depreciation difference is larger.
Use the same time horizon for both cars
Comparing one car's annual fuel bill with another car's three-year depreciation mixes time periods. Choose a common period, such as one or three years, and express every cost over that same period. If the future resale value is uncertain, run low, middle and high depreciation scenarios.
Do not double-count finance and depreciation
Loan repayments contain capital repayment as well as interest. If you already include the vehicle's purchase price and future value to calculate depreciation, adding the full loan repayment again counts the capital twice. Interest and fees are genuine financing costs; principal repayment is not an additional economic loss on top of depreciation.
Turn annual cost into a comparable pence-per-mile figure
After calculating the annual total, divide by annual mileage to get an all-in pence-per-mile comparison. This can be useful when two cars have different fixed costs. At 10,000 miles per year, £5,000 total annual cost is 50p/mile; at 5,000 miles the same fixed-and-variable total would be £1/mile. Low-mileage drivers often find that fixed costs and depreciation dominate because they are spread across fewer miles.
Do not use this all-in figure as the marginal cost of an extra trip: depreciation and insurance will not necessarily rise by the same amount for one additional journey. For a journey decision, a fuel/energy-only marginal cost can be more appropriate.