SUV purchase-some calculations

Of late, everyone is buying SUVs left and right. I myself was tempted to buy a big car but I've been resisting buying a vehicle, since my usage is minimal and I am unable to justify the overall cost of ownership. I've made some calculations below, let me know if you agree.

Assume you buy a 15 lakhs SUV (Like Mahindra XUV500, Tata Aria etc)

Assume a down payment of 3 lakhs and a 5 year loan for remaining 12 lakhs.

For 5 years, below will be the operating expenses:

• Annual insurance premium: 60k per year * 5 years= 3 lakhs
• Interest paid on loan amount:    about 4 lakhs
• Approx spend on service and maintenance: 1.5 lakhs
• You might also end up spending a lakh or two for parking lot at your apartment, however, let us ignore this expense.
• Total Spend: (Excludes fuel expenses): 15 + 3 + 4 + 1.5= 23.5 lakhs

Approx resale value at the end of 5 years: 50% of original price, 7.5 lakhs

Net loss or expense in owning the car:  23.5-7.5: 16 lakhs

No of weekends in 5 years: 52*5 = 260 weekends, 520 days 

• At an average rental amount of 4000 Rs per day, rental expense for 520 days:  20.8 lakhs
• Usually no one will travel every weekend. Assuming travel every alternate weekend, rental expense will be 10.4 lakhs
• If travelling only once a month:  5.2 lakhs 

Advantages:

• No upfront expenditure
• Option to rent different SUVs in different cities as per need (Example: While visiting Mysore/Coorg/Wayanad from Chennai, taking train to Blr and renting from Blr, instead of driving all the way from Chennai to Blr, will save about 3k in diesel and toll each trip)
• No maintenance worries, no worries about resale value

Let us see another calculation:

Assume you buy a 10 lakhs SUV (Like Mahindra Xylo, Safari/Duster base variant etc) 

Assume a down payment of 2 lakhs and a 5 year loan for remaining 8 lakhs.

For 5 years, below will be the operating expenses:

• Annual insurance premium: 40k per year * 5 years= 2 lakhs
• Interest paid on loan amount:    about 2.5 lakhs
• Approx spend on service and maintenance: 1 lakhs
• You might also end up spending a lakh or two for parking lot at your apartment, however, let us ignore this expense.
• Total Spend: (Excludes fuel expenses): 10 + 2 + 2.5 + 1= 15.5 lakhs

Approx resale value at the end of 5 years: 50% of original price, 5 lakhs

Net loss or expense in owning the car:  15.5 - 5: = 10.5 lakhs

Of course these calculations are based on lots of assumptions. If you are not taking any loan, if you never plan to sell the vehicle or if you’re using the SUV effectively every day etc then it might work out positive.  Numbers also vary depending on insurance rate, resale value you might get etc. Also these calculations are based on current rates. Rentals, insurance premium, maintenance expense etc might go up with time.

Instead of spending 15 lakhs on a SUV, one may buy a 6 lakh small car and rent SUV only when really needed.