Do you really need a diesel?
9th Jan 2013 6:40 pm
Or are you better better off with a cheaper-to-buy petrol car? Your answer is a few numbers away.
When buying a new car, it’s essential you make the right decision about which type of fuel suits your motoring needs best. The market sentiment is that diesel cars are the need of the hour. Diesel-powered cars have slowly become the default choice for Indian car buyers, but is a diesel really worth the price difference over a petrol model? This is a question all new car buyers must answer if they are to benefit from the running cost benefits of a diesel.
Diesel engines have clearly advanced over the last decade, making them more appealing. While we have seen an increase in the market share of diesel cars, petrol cars today are fighting back. We all know diesel is cheaper at the pump compared to petrol, and it also offers better fuel economy, but tallying up the numbers can reveal startling facts.
The true value of a diesel over petrol isn’t as black and white as you may think. Read on to understand how to resolve your diesel or petrol dilemma.
Let’s take the Maruti Suzuki Swift as an example. There’s a considerable price difference between the petrol and diesel variants of the Swift. The top-spec ZXi petrol variant is priced at Rs 6.29 lakh while the ZDi retails at Rs 7.78 lakh (prices, on-road Mumbai). The difference here is Rs 1.49 lakh and with an annual average running of 10,000km, or around 850km every month, you save a little more than
Rs 22,300 a year. With these figures, it would require you to travel around 66,500km for you to reach the break-even mark in six years and six months. However, this is an extreme case and there are models with a lower price difference between their respective petrol and diesel variants.
Your buying decision should also consider parameters like service cost, EMIs (in case of car finance) and, ultimately, the resale value. The diesel model will incur higher servicing bills, thanks to costlier spare parts. In terms of EMIs, the Rs 1.49 lakh premium paid for a diesel Swift will increase your monthly installments by Rs 4,896, at the rate of Rs 3,264 per Rs 1 lakh for a three-year loan tenure. This will almost negate your savings on the cheaper diesel fuel. But the diesel does have an ace up its sleeve – the resale value. Depending on the condition of your vehicle, a diesel model will fetch you more in the used car market compared to a petrol-powered car.
Fuel prices – the changing scenario
Thanks to the heavy subsidies, diesel has always been cheaper than petrol in India. Back in 2008, the difference between petrol and diesel prices was Rs 14.43 per litre, which went up to a massive Rs 33.29 per litre in May 2012.
De-regulation of petrol has resulted in several price hikes in 2012 itself. However, the recent correction in diesel prices suggest parity between fuel prices in the future is possible. In November 2012, the difference between petrol and diesel price came down to Rs 22.28 per litre and there are talks of another diesel price hike in the range of Rs 5 in the coming weeks.
When to buy a petrol car
If your average monthly running is less than 1,000-1,200km.
If you are on a tight budget, a petrol car suits you best.
When to buy a diesel car
If your average monthly running is more than 1,500-1,700km.
If petrol and diesel cars are priced the same.