Saturday, 16 June 2012

Petrol or Diesel? Choice is Yours!!!

There seems to be a lot of happenings in the car industry. We, the commercial vehicles guys, are safe. As we dont have any alternative fuel in consideration, except for some CNG operated buses. Motorcycle manufacturers also know pretty well that their customers are also in tact, because if they at all go for an alternate fuel engine(read, diesel), the rider will keep on vibrating from top to bottom even after 2 hours of reaching home.

So, the poor car manufacturers have a nightmare!! Our governments have never been friendly with them, have they? Upto four decades post-independance, we could only see Ambassadors and Premier Padminis on road. It was, as if, a calculated play from the Government to keep the cars away from common people, keeping it a "premium product for those who could afford".

Then, by 90s, with the liberalization of Economy, we saw a plethora of car making MNCs coming to India, showing them what they have been deprived of for so many years. Toyota, Ford, General Motors, Daimler, Hyndai, Honda and many other US, German and Japanese carmakers changed the way we used to drive. A diesel car with AC on, could start with the second gear engaged .. :).. Dream in the days of Ambassador- a 1500 cc Diesel engine car, even today, gets overtaken by a 800cc Maruti 800 petrol, anyday anytime.

With easily available monthly installment finance schemes and manufacturers readily available with the vehicle stocks(Remember, in the 80s, people used to wait for months together to get that dream scooter from Bajaj?), the car market changed in India. So, we have a change in trend. Not a premium product any more, cars with affordable EMIs, were a part of an Indian houseold just like a LCD TV or a Double Door Refrigerator.

Seems, the fairy tale is approaching its ends. With ever increasing petrol price and a threat of levied special taxes on Diesel cars, people are getting back to those "exclusive days of cars"- Pay premium for your fuel(in case a Petrol car) or Pay premium for your cars(in case a Diesel car).

Definitely, as long as the proposed special taxes are not actually levied, it actually makes sense for anyone with more than 1200 kms of monthly running to go for a diesel car with the following base calculation:

Price difference between the petrol engine and diesel engine: Rs 1,50,000/-(Approx)

Premium for diesel car in terms of EMI for a period of 5 years(with an assumed 11.5% ROI): Rs 3,299/-

Kms run in a month: 1200.

Diesel Car BSIV average(on a premium hatchback)= 16kmpl(with full AC on, surely you cant survive on a non AC in this summer :) )

Diesel consumed in a month=  75L

Cost of Fuel(Diesel) with Rs 44 per L= 3300.

Petrol Car BSIV average(on a premium hatchback)= 13 kmpl(with full AC on, surely you cant survive on a non AC in this summer :) )

Petrol consumed in a month= 92L

Cost of Fuel(Petrol) with Rs 74 per L= 6808.

Difference in Diesel and Petrol cost=  Rs 3508- in favour of Diesel.

Difference in EMI= Rs 3300- in favour of Petrol.

Since, Diesel cars are high maintenance cars, we can assume that Rs 200/- odd the Diesel vehicle is saving for you, would go towards extra maintenance only, concluding that you need to run your vehicle more than 1200 kms a month to ensure that Diesel vehicles are profitable than Petrol ones for the first five years.

Of course, after 5 years, upto whatever time you run your car, in the long run, Diesel cars will give you a better profitablity, but, if you just blindly want to follow the suit by taking a Diesel car without calculating your travelling requirements, you might end up losing.

This thought of writing the article came from one of my acquintances who work in a Ford showroom, who shared with me that nowadays, even a guy with monthly running of 600km, is also demanding a Diesel car- which I think is foolish. 

Anyhow, I have only considered the commercial terms of the comparison, and not the other advantage/disadvantages like better initial pick up of a petrol car, lower engine noise of a petrol car or a better torque of a diesel car. That is upto your wish, what you want? Wanna get faster than others when the traffic signal goes Green? Go Petrol. Wanna climb faster the slopes of the flyover with your AC on and the vehicle on higher gears? Go Diesel.

Thanks for keeping your patience and going through this write-up, and have a great drive ahead..!!! :)

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