The purchase price of a truck or van tells you very little about what it really costs. Two identical vehicles bought on the same day can end up with very different costs a year later, depending on the driver, the routes and the maintenance. The true cost per kilometre is the number that lets you compare them, spot the ones that drift and decide when to replace a vehicle.
What the true cost includes
A vehicle's costs fall into two groups.
Fixed costs, whether the vehicle moves or not:
- insurance;
- registration and licence fees;
- depreciation (or lease payments);
- financing charges;
- parking or storage, if paid separately.
Running costs, which grow with the kilometres:
- fuel or electricity;
- routine maintenance (oil changes, filters, fluids);
- repairs;
- tires, including seasonal changeovers;
- tolls and, depending on your policy, fines.
The most common mistake is to count only fuel and repairs. For most service vehicles, insurance and depreciation weigh as much as everything else.
The formula
True cost per km = (fixed costs + running costs for the period) ÷ kilometres driven in the period
Two conditions make the number meaningful:
- The same period for every vehicle: a month, a quarter or 12 months.
- A real odometer reading at the start and end of the period, not an estimate.
If your vehicles are tracked in miles, the same formula gives you a cost per mile.
Working out depreciation simply
If you own the vehicle, a simple method is enough for management purposes (your accountant will use the tax rules separately):
Annual depreciation = (purchase price − estimated resale value) ÷ planned years of ownership
If the vehicle is leased, use the lease payments for the period.
A worked example
Here is an illustrative example for a service van over 12 months, with 38,000 km driven:
| Item | 12-month amount (your currency) |
|---|---|
| Fuel | 7,600 |
| Maintenance and repairs | 2,400 |
| Tires | 900 |
| Insurance | 2,800 |
| Registration and fees | 650 |
| Depreciation | 6,000 |
| Total | 20,350 |
True cost: 20,350 ÷ 38,000 km = 0.54 per kilometre.
Without insurance, registration and depreciation, you would have calculated 0.29/km, almost half. That kind of gap is what skews replacement decisions.
Comparing vehicles with each other
Once every vehicle has its number, rank them from most to least expensive per kilometre. The ranking quickly answers useful questions:
- Which vehicle costs abnormally much? Often one or two vehicles account for most of the repairs.
- Is it the vehicle or how it's used? Compare vehicles of the same type on similar routes.
- Should it be replaced? When repairs push an older vehicle's cost per km above a newer one's, the question is worth asking.
Look at the split by category too: high fuel cost isn't fixed the same way as high repair cost.
A benchmark: official mileage rates
In many countries, the tax authority publishes an official mileage rate: the amount per kilometre (or per mile) a business can reimburse an employee who uses their own vehicle for work. That rate isn't the cost of your company vehicles, but it gives you an order of magnitude.
If a vehicle in your fleet costs clearly more per kilometre than your country's rate, it's worth finding out why.
Mistakes that skew the number
- Invoices filed against the wrong vehicle. A single misfiled repair invoice changes the ranking.
- Expenses paid on a personal card and reimbursed later, which never reach the tracking.
- Estimated mileage instead of a real reading.
- Forgetting depreciation, or counting it for some vehicles only.
- Comparing different periods, such as one vehicle's winter against another's summer.
Doing it without a spreadsheet
The calculation is simple. What takes time is collecting every receipt, assigning it to the right vehicle and keeping mileage up to date. That's exactly what CarFai for fleets does: drivers photograph receipts and invoices, AI extracts the amount, date and vendor, assigns the expense to the right vehicle, and you see the true cost per vehicle and per kilometre, with a ranking of the most expensive vehicles.