Are half the buyers of diesel cars making a mistake?

So just what fuel type should you choose? Does the earlier logic of the more you run your car, the better your cost realization in diesel still hold good? After diesel price de-regulation the price difference between the fuels has narrowed. But the purchase price gap between the cars – of a same model that has a diesel and a petrol option has widened.

In such a scenario, does it still justify buying a diesel car for those who run less than 500 km a month? The thing is with more diesel car options being easily available, and the feel good factor that you get filling diesel (more fuel for lower price), many buyers who don’t drive a lot are being swayed towards this fuel. Is it a case of penny wise, pound foolish?

Let’s illustrate this with our good old example, by comparing the running cost and purchase cost difference of a Maruti Swift – one of the most popular cars in India and available with petrol and diesel options. (See the earlier edition: Does diesel still make sense?)

Running & Maintenance Cost Difference

The Maruti Swift petrol is powered by a 1.2 litre petrol engine, putting out 84 bhp of power and 114 Nm of torque, with a claimed fuel efficiency of 20.4 kmpl. For purposes of this calculation, we will look at real-world mileage of an average of 13 kmpl.

The Maruti Swift diesel is powered by a 1.3 litre diesel engine, putting out 74 bhp of power and 190 Nm of torque, with a claimed fuel efficiency of 25.2 kmpl. For purposes of this calculation, we will look at real-world city mileage of about 16 kmpl. (Diesel cars are about 20 to 25 per cent more fuel efficient than petrol cars).

The ex-showroom price difference between the two cars (Maruti Swift ZXI and Maruti Swift ZDI) is about Rs.1.1 lakh, with an on-road price difference of Rs. 1.34 lakh. And this does not factor in subsequent years recurring costs – higher insurance premium on the diesel and 20 per cent higher maintenance costs (owing to parts like diesel filters, mounts etc).

The current fuel prices in Delhi (rounded off) – Rs 50 per litre of diesel and Rs. 61 per litre of petrol.

[table id=1073 /]

When Does Diesel Make Sense?

Now, if you are a person who drives just 500 km a month, it will take you about 182 months (or over 15 years) of driving to justify the additional investment in a diesel car. That’s more than the lifetime of the car.

However, if you are a high-miler, and one who drives more than 2,000 km a month, then it will take you just 42 months (three and half years), to justify the additional investment in diesel. After this break-even period it is advantage diesel. (See table below)

[table id=1075 /]

What happens if you take a loan?

The price difference of Rs. 1.34 lakh between the petrol car and the diesel car would mean an additional EMI of Rs. 2,500 per month on a five-year loan. If you are buying a diesel car on loan, and paying this extra EMI, you just have to drive 1,500 km a month and it will automatically justify the additional investment in diesel within the loan tenure on a five year loan. But at only 500 km a month, only about Rs 780 of this additional EMI can be offset against the lower fuel price, and will take more than the lifetime of the car to justify.

Therefore, if you are buying a diesel car and drive less than 500 km a month, you will need to keep the car for at least 15 years for it to make sense (not factoring in the much higher maintenance cost). But if you drive over 1,500 km a month the investment in a diesel car is well worth it, within five years. If fuel prices narrow even more, your break even point will climb even further.

So what’s your excuse for driving diesel?

Also see: Diesel Decider App – Calculate Whether You Need a Petrol or Diesel Car