Why cheaper fuel doesn't necessarily mean a cheaper car

It's an easy trap: a car that costs less to fuel or charge per mile feels like the cheaper car, full stop. Running cost is only one line in the total — and often not the largest one. A car that saves you money every time you fill up or charge can still cost more overall once you account for what it cost to buy, what it loses in value, and what it costs to insure and maintain.

What can outweigh a fuel saving

• Depreciation — usually the biggest single cost of owning any car. A cheaper-to-run car that loses value quickly can easily cost more overall than a thirstier car that holds its value well.
• Purchase price and finance cost — a higher list price, or interest paid on a loan or PCP agreement, adds up over the time you own the car, regardless of what it costs to fuel.
• Insurance — premiums vary by model, and a car with a cheap-to-run engine isn't necessarily cheap to insure.
• Tax (VED) — annual road tax varies by vehicle and can add a meaningful amount over several years of ownership.
• Servicing and maintenance — parts, labour rates and service intervals differ by manufacturer and model, independent of fuel economy.

A simple illustration

Illustrative figures only, over 3 years and 30,000 miles — not real prices for real cars:

Car A saves £1,800 on fuel or energy over the three years — but its faster depreciation and higher purchase price mean it still costs more overall than Car B. Neither car is "the cheap one" until every category is added up.

How to check which applies to you

The only reliable way to know which car actually costs less is to add up all the categories for your specific cars, your mileage, and your own quotes — not to assume from one number in isolation. A cost-per-mile figure is useful for comparing like-for-like running costs, but it doesn't include depreciation or purchase price, so it isn't the whole answer either.

Last reviewed: 30 August 2026.