Volkswagen finance scheme makes petrol Vento as economical as diesel

Very recently, the prices of petrol went up a few notches and as a result buyers queued up to buy diesel cars. The sales of petrol cars hit a slight bump. Now carmakers have started coming up with new propositions to make their petrol offerings a bit more alluring.

Recently, Volkswagen came up with schemes for the petrol versions of the Vento. Volkswagen is offering financing on the Vento petrol, with a deep cut in the interest rate for both 3-year and 5-year loans.

Buyers can get 80% of the petrol Vento’s cost as loan, at an interest rate of only 6.99% for a 3-year loan, and 8.49% for a 5-year loan. In the market, car finance rates are 12% and above currently (and are expected to rise even further).

CarToq spoke to Volkswagen dealer in Delhi, and he said the response to the scheme was quite good: roughly 8 out of 10 buyers were opting for the petrol version since the scheme was unveiled. . Here is why the Vento petrol scheme is indeed attractive.

We first calculated the difference in monthly cost of ownership (EMI payments plus monthly fuel costs) for Vento petrol and diesel for an assumed monthly usage of 1,000 kilometers. We then calculated the monthly cost of ownership for the petrol Vento with lower interest rates and compared it with monthly outgo on the the diesel version.

The results were surprising, and perhaps offer a clue to other manufacturers how to better the economics of petrol cars for their buyers.

Vento petrol vs. Diesel – Before the Scheme:

The Volkswagen Vento 1.6 TDI Trendline has an ex-showroom price of Rs. 799,000 for which the EMI (taking interest as 12% and loan amount as 80%) will be Rs. 21,020 for a period of 3 years. For the petrol version, which costs Rs 699,000, the EMI works out to Rs. 18,390.

Now, let’s add the monthly fuel costs. Vento diesel has a mileage of around 16 kmpl. If the car is driven 1,000 km every month, the diesel bill would be Rs. 2,375 (diesel price assumed at Rs. 38 per litre).

The petrol Vento has a mileage of around 11kmpl, and with the same 1,000 km usage, the monthly petrol bill would be a hefty Rs. 5,818(petrol price assumed at Rs 64 per litre).

This way, the monthly cost of ownership (EMI+Fuel Cost) for the Vento diesel adds up to Rs.23,395 and for the petrol Vento, the cost is Rs. 24,208. So owning the diesel would actually be Rs 813 per month for the buyer.

Vento Petrol vs. Diesel- After the Scheme:

Now, with this new loan scheme for petrol, Volkswagen has reduced the EMI cost on petrol version significantly. The EMI for petrol Vento drops down to Rs 17,164 for a period of 3 yrs (with the offered interest rate of 6.99%) and Rs. 11,390 for a period of 5 years (with the offered interest rate of 8.49%).

Thanks to this scheme the monthly cost of ownership for the Vento Petrol comes down to Rs.22,982. So now, the petrol version trumps diesel since you save Rs. 413 per month. Earlier spent Rs 813 more per month.

Volkswagen is absorbing some of the financial costs, and therefore reducing its margins on the petrol car, but it should help them push up the sales. Would such a scheme change your decision to petrol from diesel? Use the Diesel Decider tool to evaluate your options better