Cost per kilometre is the single most useful number in fleet management. It tells you what each vehicle really costs to run, whether a route or customer is profitable, and which vehicles should be serviced, reassigned or sold. Yet many fleets only know their fuel bill. This guide shows the formula, a worked example, and how fleet software keeps the number up to date without spreadsheets.
What cost per km tells you
Cost per km (CPK) is the total cost of running a vehicle over a period divided by the kilometres it ran in that period. Tracked monthly for every vehicle, it answers practical questions:
- Which trucks, buses or cars are the most expensive to run - and why?
- What should we quote a customer per km or per trip to stay profitable?
- Is an ageing vehicle now costing more than replacing it?
- Did fuel efficiency drop after a driver change or a route change?
The formula: variable costs plus fixed costs divided by kilometres run
Cost per km = (Variable costs + Fixed costs) ÷ Kilometres run
Variable costs rise with every kilometre:
- Fuel (or electricity for EVs)
- Tyres - purchase price spread over expected tyre life
- Routine maintenance and repairs (job cards, spares, labour)
- Lubricants, AdBlue and consumables
- Tolls and trip expenses, if the vehicle bears them
Fixed costs are paid whether the vehicle moves or not:
- Driver salary and allowances
- Insurance, road tax, permits and fitness certificate
- EMI or depreciation
- GPS, telematics and parking
Use the same period for every figure - usually one month - and take kilometres from odometer readings or GPS, not from estimates.
Worked example for one truck for one month
| Cost item | Amount (₹) |
|---|---|
| Diesel: 1,250 litres | 1,15,000 |
| Tyres: set of 10 at ₹2,40,000 over 1,00,000 km, for 5,000 km | 12,000 |
| Maintenance and repairs (job cards) | 9,500 |
| Driver salary and allowances | 28,000 |
| Insurance, tax and permits (annual cost ÷ 12) | 8,500 |
| EMI / depreciation | 45,000 |
| Total | 2,18,000 |
The truck ran 5,000 km in the month, so cost per km = ₹2,18,000 ÷ 5,000 = ₹43.60. Fuel alone is ₹23 per km, which is why mileage (km per litre) is the first number to watch. If the same truck ran only 3,500 km the next month, fixed costs would spread over fewer kilometres and the CPK would rise - idle time is expensive.
Fuel efficiency, tyres and maintenance - the biggest levers
- Fuel: compare km per litre for each vehicle against its own average and against similar vehicles. A sudden drop points to driving style, overloading, a mechanical issue or fuel pilferage.
- Tyres: correct pressure, rotation and timely retreading extend tyre life - and tyre life directly changes the per-km cost.
- Preventive maintenance: planned servicing is cheaper than breakdowns, which add towing, downtime and missed trips. See our guide on planning a fleet maintenance schedule.
- Utilisation: more productive kilometres spread fixed costs further, lowering CPK.
How fleet software calculates it automatically
In Netmore Fleet Manager every cost is already captured where it happens: fuel slips against vehicle and odometer, job cards and spares from the workshop, tyre fitment and removal, driver payroll and documents with their renewal costs. Trips and odometer readings provide the kilometres. The system then shows cost per km for every vehicle, every month, with the breakdown - and flags vehicles whose CPK or mileage moves outside the normal range.
That turns a monthly spreadsheet exercise into a dashboard your transport manager checks every morning.
Frequently asked questions
What is a good cost per km for a truck in India?
There is no single figure - it depends on vehicle size, load, route, fuel price and finance cost. Compare each vehicle against its own history and against similar vehicles in your fleet; that comparison is far more useful than an industry average.
Should driver salary be included in cost per km?
Yes, for a full operating cost. Some fleets also track a "running cost per km" without driver and finance costs to compare vehicles mechanically - fleet software can show both.
How often should cost per km be calculated?
Monthly for every vehicle, with fuel efficiency watched weekly. Software calculates it continuously from fuel, job card and trip entries.