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Money Aug 13, 2012

Diesel or petrol car: how do you decide?

By Bindisha Sarang

Diesel or Petrol? A question every potential car buyer faces. If you go by a report published in Hindustan Times on August 10: Diesel is driving up car sales in the country. In fact, Economic Times reported today, that 30 new models are planned by car-companies for the Indian car market in the near future.

Which means, you will have more choices. But you will still face the question, diesel or petrol. Of course, it's common knowledge that the price of petrol is higher than diesel. In fact, petrol is priced at Rs 68.48 per liter while diesel is priced at the upside of advantage at Rs 41.29 per liter as of today. Now, don't just let the fuel prices be the deciding factor, between diesel and petrol. Here's a list of things to keep in mind.

Reuters

Cost of car: One of the most important factors to take into account while deciding on the variant of the car is the cost of the car. Samuel Jayekumar, Chairman and Director, Carsalesindia.com, says, "The diesel variant of the same car will be a minimum of Rs 1 lakh more expensive as compared to the petrol variant. In fact, for top-end models the diesel variant is on an average more expensive by Rs 2-3 lakh."

Consider this: a Maruti Swift LDI would cost you around Rs 5.5 lakh while the petrol variant Swift LXI will cost around Rs 4.4 lakh in New Delhi, as per the companies website. Keep in mind, that if you plan to buy the diesel variant, you will land up paying the higher amount as the total cost, especially if you plan to buy the car on a loan. So, the possible saving you plan to make by buying a diesel car (on fuel price) might be offset due to the higher price of car, as compared to the petrol variant.

Cost of the loan: It's common knowledge that around 80% cars are bought on a loan. Which means, the cost of the car is not the real cost, but you have to look into the real cost by taking into account, the cost of the loan as well. So, if we compare a Rs 5 lakh (diesel car) and Rs 4 lakh (petrol car) and you pay a rate of interest of 12% per annum for a term of 5 years, the total cost of the diesel car will come to 6.67 lakh, while the same for the petrol variant will come up to Rs. 5.33 lakh. Relative difference is Rs1.77 lakh for diesel but for the petrol its 1.33 lakh after the loan, as compared to the cost of the car itself.

Usage: Another important area to examine while deciding is the number of kilometres you plan to drive. Says, Abdul Khan, Manager, Western India Automobile Association, "If you plan to drive more than 500 kilometres a week, or around 70 kilometres a day, it's best to go for diesel car." If you plan to drive around 200 kilo-meters a week, petrol car will work well for you. The choice between a diesel or petrol will also depend upon the number of times you plan to use the car. Jayekumar says, "If you plan to use the car, only once or twice a day or use it only on weekends, then you should go for the petrol variant." The number of commuters will also play a role in the decision making process. For instance, if you buy an eight-seated vehicle, buying a diesel version makes more sense. Says Hemant Dalvi, CEO, Hemant Motors, "If more number of people plan to travel at one time, go for the diesel model. This will ensure that you justify the higher cost of the car." For a single user buy, a petrol variant makes more sense.

Maintenance cost: Just like the cost of a diesel car is more than the cost of a petrol car, the cost of maintenance of a diesel car is also slightly higher than a petrol car. Says, Khan, "If a well serviced petrol car would cost you around Rs2, 000 to Rs3, 000 every six month for maintenance, a diesel car will easily make a hole in your pocket by a thousand rupees more." Do, keep in mind that as far as insurance goes, the premium you pay towards a diesel car is also slightly higher than what you would have paid for petrol version.

Cost of fuel: The price of petrol today stands at Rs 68.48 while diesel stands at Rs 41.29. This largely is because diesel is a subsidized fuel, but that may not be for long. Says, Jayekumar, "Since diesel is used mostly by commercial entities like trucks and tractors, it's largely subsidized. But there are talks going on to bring about two prices. One (subsidized), for commercial consumers and another (unsubsidized) for retail consumers. Good possibility, that in the future the subsidy may not longer be available." Of course, how long this will take, only time will tell. But it's a good to have this information at the back of the head. As far as mileage goes, a diesel car is a better bet than petrol one. A litre of petrol could help you travel circa 15 kilometres while the same litre of diesel would help you charter circa 21 km.

Resale Value: A parameter which most forget to look into is the resale value of the car. After a few years when you want to sell of the current car and buy a new car, the resale vale plays an important part in funding your new buy. There too diesel beats petrol. Jayekumar, says. "A diesel car will surely give you a better resale value as compared to a petrol car. But keep in mind, this will depend more on the brand and model of the car. For instance, a Fiat diesel car will hardly offer you a good resale amount." So, do check the resale value of the brand, model and variant before you decide on the car.

Use the above mentioned factors, analyse your need and budget, to firm up your choice of variant.

Note: There are LPG and CNG variants available too, but that's another story. Keep tracking this space for more.

by Bindisha Sarang

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