Vehicle Depreciation Calculator

Eight lakh after two years

A car bought for ₹10,00,000 is valued at ₹8,00,000 after two years — a loss of ₹2,00,000, or 20%, using the IRDAI depreciation schedule that governs insured declared value.

Depreciation is the largest cost of owning a car and the only one that never appears on a bill. Fuel, servicing and insurance are all paid visibly. The ₹2,00,000 lost here is paid silently, and is only realised at the moment of sale.

The schedule

For insurance purposes, IRDAI prescribes a fixed depreciation table applied to the manufacturer's listed selling price:

• Up to 6 months — 5%
• 6 months to 1 year — 15%
• 1 to 2 years — 20%
• 2 to 3 years — 30%
• 3 to 4 years — 40%
• 4 to 5 years — 50%
• Beyond 5 years — mutually agreed between insurer and owner

The two-year figure of 20% gives the ₹8,00,000 above.

Note what this table is for: it determines IDV, the maximum an insurer pays on theft or total loss. It is a regulatory convention, not a market valuation, and the two can differ considerably.

Market value versus IDV

Actual resale prices in India tend to be less generous than the insurance schedule in the first year and can be more generous later, depending heavily on the model.

Typical market depreciation runs roughly:

• Year 1 — 15–20%, with much of it occurring the instant the vehicle is registered
• Year 3 — 35–45% cumulative
• Year 5 — 50–60% cumulative
• Year 10 — 75–85% cumulative

The variance between models is large. Vehicles with strong resale reputations hold value considerably better than the average, while models with poor service networks, discontinued lines, or unusual fuel types can fall much faster.

What drives the difference

Brand and model reputation — the single biggest factor, often worth 10–15 percentage points at the three-year mark.

Kilometres driven. Above roughly 15,000 km a year, buyers discount heavily.

Service history. A complete authorised-service record is worth a genuine premium and is the cheapest thing to maintain.

Fuel type. Diesel resale has weakened with tightening emissions rules and the ten-year NCR restriction; EV resale remains less established, with battery condition the dominant question.

Accident history. Any structural repair, once recorded, substantially reduces value.

Colour and variant. Common colours and mid-range variants sell more easily than unusual ones; top-end variants rarely recover their premium.

Reading the result

The figure is an IDV estimate, appropriate for insurance renewal rather than for negotiating a sale. For resale, check actual listings for your model, year and kilometre range.

For a business or self-employed owner, note that income tax depreciation is different again — vehicles are generally depreciated at 15% a year on a written-down-value basis under the Income Tax Act, with a higher rate for vehicles acquired in certain windows. That figure is for tax computation and matches neither the IRDAI table nor the market.

The practical implication of all this arithmetic: depreciation is front-loaded, so a two or three-year-old car lets someone else absorb the steepest part of the curve. The counter-argument is warranty coverage and known history, which is a genuine trade rather than an obvious answer.

Common mistakes

Treating IDV as resale value. They serve different purposes and rarely agree.

Under-insuring to save premium. A low IDV reduces the payout precisely when it matters.

Ignoring depreciation in the ownership cost. It usually exceeds fuel across the first few years.

Assuming all models depreciate alike. The spread between the best and worst is very wide.

Neglecting the service book. It costs nothing to maintain and is worth real money at sale.