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What is Total Cost of Ownership?

Total Cost of Ownership (TCO) is a data science-based tool which calculates the total money that you will have to spend owning a car, bike or a scooter for a period of five years. This tool also helps in comparing the ownership of cost of vehicles and let you know which will be the cheapest for you to own. You can also view the breakdown of the cost among different parameters such Insurance Cost, Fuel Cost, Tyre Change Cost, Service Cost, Depreciation.

Read More About TCO

How it works?

TCO Methodology:

TCO Glossary:

How it works?

Step 1

Choose Vehicle Name

Step 2

Enter Monthly Running Kms

Step 3

Click Check TCO to get the result

TCO Methodology:

Total cost of ownership is based on the Ex-showroom price and monthly running kilometers of a vehicle. All the costs such as insurance cost, fuel cost and so on are calculated using Droom's propriety algorithm

Steps in Calculation:

  1. The Ex-showroom price of the vehicle is captured when you enter the vehicle name.
  2. Insurance cost is calculated based on IDV (Insured Declared Value) of the vehicle each year
  3. Fuel Cost for 5 years is calculated depending upon the monthly running kilometers and mileage of the car
  4. Tyre change cost is calculated considering the cost of new tyres and monthly running kilometers
  5. Regular maintenance/service cost is taken for 5 years
  6. Depreciation is taken for each year and added in total ownership cost

The tool gives the ownership cost of any car, bike, scooter in two forms:

  1. Total cost of ownership of a vehicle as a whole number and ownership cost per kilometer
  2. Individual cost split up for a period of five years in a graphical comparison form

TCO Glossary:

Insurance Cost: It is mandatory for every vehicle running on Indian roads to have an insurance coverage both for the vehicle and third party. This Insurance requires a premium to be paid every year. The sum of premiums of the vehicle for a period of five years gives the insurance cost.

Fuel Cost: Every vehicle returns different mileage. Depending upon the monthly running kilometers, mileage and fuel type, the fuel cost will vary.

Tyre Change Cost: This includes the cost involved in replacing the existing tyres with new ones during 5 years

Service Cost: Every automobile will require a regular maintenance and the expense for this maintenance varies depending upon the brand, kilometers run and age of the vehicle. This service/ maintenance cost has been calculated for a period of 5 years.

Depreciation: The value of every vehicle goes down from the time of manufacturing throughout the useful life. This decrease in value year on year throughout the useful life of the vehicle is called depreciation.