What’s The True Cost Of Vehicle Ownership?

If you are looking to buy a car soon, it would be wise to do your research on how much does a car exactly cost. The cost of car ownership is not as simple as paying for your car loan, but it also involves the cost of day-to-day running of your car.

The total cost goes beyond its purchase price when you consider out-of-pocket expenses like petrol and insurance, plus the car’s loss in value over time (depreciation).

Let’s examine the true cost of owning a Proton Persona 1.6 CVT Executive at RM54,600 for five years.

1. Financing

Unless you started saving the day you were born just to buy a brand new Proton Persona, chances are you will have to get a hire purchase loan to afford a car in Malaysia.

If you go the usual route, you will have to fork out 10% of the car price, and the rest of the 90% will be financed. Here is how much you will have to pay in interest over a five-year tenure:

With the maximum hire purchase loan tenure at nine years, car buyers who choose the longer loan tenure will have to fork out more on financing over time. Find out how much your will be paying in interest on a longer loan tenure.

2. Depreciation

Depreciation is one of the highest costs in owning a car. It is how well the vehicle holds its value over time. This is particularly important if you keep the car for less than five years as the depreciation rate is always higher in the initial years of ownership.

The moment you receive the keys from the car dealer, you’ve already lost thousands of ringgit, and this crazy phenomenon is known as depreciation.

To illustrate how much depreciation will cost you for a five-year-old Proton Persona:

Factors that can accelerate the depreciation rate of a car are the mileage, brand, and history of reliability, degree of wear and tear, modifications and who you sell your car to (selling your car to a car dealer will lower your selling price further).

3. Petrol consumption

Surprisingly, petrol is the second highest cost of vehicle ownership. When the government removes the fuel subsidy, this cost will surely skyrocket.

Choosing a car with good rated economy may be able to help you lower this cost. A Persona 1.6 CVT boasted a fuel consumption of 6.1 litres per 100 km. Assuming an average of 1,000 km a month, here is how much you are estimated to pay for petrol over five years.

When the government does remove the RON95 petrol subsidy like the diesel subsidy rationalisation, the total petrol consumption cost could easily triple this amount!

4. Maintenance and repair

The key to keeping vehicles running well, and repair cost low down the road of car ownership is to do routine maintenance.

Though many new cars today comes with a five-year warranty, the manufacturer warranty usually does not cover service cost. The general service maintenance schedule for a Proton Persona is as follows:

Distance and time	Maintenance cost
1,000km / 1 month	RM134.08
10,000km / 6 months	RM136.08
20,000km / 12 months	RM215.65
30,000km / 18 months	RM452.38
40,000km / 24 months	RM374.01
50,000km / 30 months	RM207.35
60,000km / 36 months	RM1007.80
70,000km / 42 months	RM207.36
80,000km / 48 months	RM374.01
90,000km / 54 months	RM452.38
100,000km / 60 months	RM405.77
TOTAL	RM3,786.87

Some of the common maintenance routine involves engine oil, engine oil filter, drain plug gasket, spark plugs, and air filter while the relatively uncommon ones involve fuel filter, transmission oil and FEAD Belt.

As the Proton Persona comes with a five-year warranty, you can save some money on repairs, assuming that the warranty covers the repairs you require. However, to be on the safe side, the general rule of thumb is to allocate 1% of your car value every year for maintenance purpose, and to have an emergency fund of 10% of your car value for unexpected servicing cost.

5. Road Tax

Depending on where the car was bought (Peninsular or East Malaysia), type of vehicle ownership (private or company) and engine capacity, road tax is one mandatory cost that you are unable to escape from.

For a Persona of 1.6cc in Peninsular Malaysia, the road tax rate is RM90.00 a year. That amounts to RM450 over five years.

For petrol vehicles, the Malaysian road tax rate is determined by the car’s engine capacity. For electric vehicles, the EV road tax rate is based on the car battery wattage which currently works out much cheaper than petrol vehicles on the road.

6. Insurance

Another annual cost of owning a car is motor insurance premium. This can be significantly higher than your road tax cost as it depends on the value of your car. You can use our car insurance calculator to find out your car insurance premium.

Here’s an estimate of the annual motor insurance premium for a car if you own it over five years.

Period of insurance (with no claims made)	Car value	Insurance premium
First year	RM56,469 (new)	RM1,261 (first year)
Second to fifth year	RM35,744 - RM21,490 (est)	RM2,573 (2nd to 5th year)

Those who stay or commute in flood-prone areas may also want to opt for flood coverage as well.

7. Parking and toll

Unfortunately, the cost of vehicle ownership does not end here. There are still other miscellaneous costs that may look insignificant, but can add up to quite a sum. Here are some hidden costs that you may have overlooked.

If you are unfortunate enough to work in the city centre, be prepared to fork out at least RM300 a month for a parking bay. This does not include the various parking fees we pay when we go for meetings and shopping.

Let’s assume a city driver spend about RM300 a month on parking alone.

There are still toll payments to consider. Almost every major highway in the Klang Valley has a toll booth. You can easily pay at least RM80 a month in toll, if you happen to drive pass a tolled road to work every day.

In five years? That will come up to RM18,000 in parking fees and RM4,800 in toll! That’s a cool RM22,800 out of your pocket in five years.

Do bear in mind that the parking and toll costs can vary greatly depending on where you are located and your driving habits. Someone who don’t commute to the city centre, and lucky enough to get free parking at work, may see a very low cost in this category.

How much would you be paying? 

Purchase price	RM54,600.00
Loan/financing interest	RM8,599.00
Petrol costs	RM7,503.00
Maintenance	RM3,786.87
Road tax	RM450.00
Insurance	RM6,053.79
Parking and toll	RM22,800
Total	RM103,792.66

This means a car that has a RM54,600 price tag to buy will cost RM103,792.66 to own over five years!

Though it’s easy to be a car owner in Malaysia, it is a much bigger investment than people expect. While it offers a lot of freedom of transportation, this could turn into a major cost sink for those who are unprepared to shoulder the burden – and we haven’t even begun to talk about things breaking down.