A brilliant article about the cost of owning a vehicle @ ZigWheels.
by Ravi Ved and Dilip Desai Pictures: Kunal Khadse
For people who are still contemplating on
whether to buy a Petrol or Diesel car J
Case - 1
With the prices of petrol skyrocketing, car
buyers seem to be lining up to book diesel variants as they are highly
economical and easy on the pocket compared to their gasoline counterparts.
Well, that is only if you discount everything else and consider the running
cost. We at ZigWheels take a look at the bigger picture and bring it down to
simple numbers to find the cost-effective option between petrol and diesel
fueled variant
We did the math to compare the cost of
operation for an entry level Maruti Suzuki Swift petrol with the diesel
variant. The difference in the cost of the two variants is Rs. 90,000 with diesel
being the more expensive of the two; add to that the interest one would gain on
the excess amount at 10% p.a if the petrol variant was purchased. The diesel
variant being more efficient and the cost of diesel being Rs. 20/litre lesser
than that of petrol, it saves a lot of expenses on fuel (See Case 1), but the
cost of regular maintenance of the diesel variant is higher than that of its
petrol equivalent. Taking all these dynamics into account, the running cost of
a petrol car comes to approximately Rs. 4.93/km in comparison to Rs. 9.5/km for
the diesel if both the vehicles are run for 15000kms annually. Increasing the
annual mileage put on the odometer, the diesel is at par with the petrol
variant if and only if a person does a minimum of 45,000kms annually.
CASE - 2
Low running? Wait for longer to recover costs
Now, it is understandable that an average Indian cannot put 45,000kms on the odometer annually considering the average run of an Indian being around 15,000kms per year. So does that totally rule out the diesel option? Well, no. Reverse calculating the amount of money saved on fuel (See: Case 2) by using a diesel car amounts to Rs. 30,500 annually after deduction of service costs for both the vehicles. Even so, after adding interest on the additional amount paid by a buyer at the time of purchase the diesel would be at par with the petrol variant mid-way through the third year. At the end of the fourth year with an annual running of 15,000kms, the money you would have saved in terms of running costs in a diesel would cover up the extra price you have paid, and you would have saved an extra Rs 9,700 as well. Only at the end of the fifth year do things begin to look rosy for diesels, with around Rs 40,000 saved in running costs over these five years.
Now, it is understandable that an average Indian cannot put 45,000kms on the odometer annually considering the average run of an Indian being around 15,000kms per year. So does that totally rule out the diesel option? Well, no. Reverse calculating the amount of money saved on fuel (See: Case 2) by using a diesel car amounts to Rs. 30,500 annually after deduction of service costs for both the vehicles. Even so, after adding interest on the additional amount paid by a buyer at the time of purchase the diesel would be at par with the petrol variant mid-way through the third year. At the end of the fourth year with an annual running of 15,000kms, the money you would have saved in terms of running costs in a diesel would cover up the extra price you have paid, and you would have saved an extra Rs 9,700 as well. Only at the end of the fifth year do things begin to look rosy for diesels, with around Rs 40,000 saved in running costs over these five years.
What about depreciation?
Alright, so you finally made up the extra
amount you spent in the initial invest of a diesel car, but what about
depreciation? Assuming that both the variants have been reduced to half their
cost after 5 years, you will still be losing more money in depreciation for the
diesel, since it was a more expensive buy to start with.
The value of a Rs 4.95 lakh petrol car will be reduced by Rs 2.47 lakh at the end of five years. The value of a Rs 5.85 lakh diesel car on the other hand will be reduced by Rs 2.92 lakh – that’s Rs 45,000 lost straight in depreciation for a diesel.
This is an extreme scenario, we accept. The market dynamics for more-in-demand second hand diesel car space may result in lesser depreciation, and a better resale price. Either ways, the Rs 40,000 that a diesel user may gain after using the car for five years starts looking less rosy once you factor in depreciation as well.
Although, with the price of petrol is as high as Rs. 70/litre, the diesel may seem like a more affordable option, it may not necessarily be so. The diesel starts making economic sense for users who either have a run of 45,000kms annually or those who plan to retain the car for atleast five years or till the time they hit 50,000 kms on the odometer. And for those who have much less travelling to do in a car, the petrol still makes for a better buy.
What about the feel factor?
Although mathematics seem to be in favour of
a petrol car unless you plan to retain a diesel for a prolonged period or drive
seriously long distances within the first year itself, it is clear that the
choice between petrols and diesels also has other angles that must be
considered before making that final call.
Psychological satisfaction is of utmost
importance to an Indian customer; and along with it comes the mental peace of
not having to refuel a diesel car every few days unlike the petrol equal which
is pretty much perpetually thirsty. But, simply the fact that the diesel needn’t
be refueled very frequently doesn’t make it a more economical option. A diesel
starts making sense only when you have a run of at least 15,000kms anything
less than that and diesel will smartly fool you into feeling richer just
because you end up filling fuel less frequently.
It is not just the thirst for fuel of petrol
cars that brings diesel vehicles into the lime light. The numbers before you
clearly state, that you should consider buying a diesel only if your monthly
run exceeds a 1000 kilometres. In fact our thesis was endorsed by Toyota at the
recent launch of the Etios and Liva diesels, where they made it very clear that
for a diesel to start looking rosy; one has to run it for nearly 2000kms a
month. The numbers are before you, so remember that with a diesel, you would
still be paying that extra cash for the first three-four years of running for
the satisfaction of driving a diesel. It still is a case of different strokes
for different folks, and choice still remains in the hands of the buyer. Hope
this article helps you make a more informed one.
