Is it better to buy petrol or diesel car in India?
The most important question for many car buyers in India is whether to buy a petrol or a diesel car. This question "new car petrol or diesel?" becomes more important when someone is buying a new small car.
Diesel vs Petrol car running cost calculator
Let us do an actual calculation of petrol vs diesel car running costs. We will take an example of someone trying to decide on buying a new Maruti Swift Dzire petrol or diesel. He will first consider the on-road price of both the petrol and diesel versions of Maruti Swift Dzire. Let us round off the price to make the calculation easier. Assume the price for the diesel version of Maruti Swift Dzire is ₹ 7,00,000- and for the petrol version he gets a price of ₹6,00,000-. These are the approximate on-road prices of the diesel and petrol versions of Maruti Swift Dzire at the time of writing this.
Let us assume that our prospective Maruti Swift Dzire buyer drives on an average 100 kilometers a day, which will total to 36,500 Km in a year. The Kilometers per liter for Maruti Swift Dzire as per the Maruti Swift website is 23.4 kmpl for the diesel version and for petrol version 19.1 kmpl. So for 36,500 kilometers in a year the diesel version of Maruti Swift Dzire will consume 36500/23.4=1559.8 liters of diesel and for the petrol version of Maruti Swift Dzire it will be 36500/19.1=1910.99 liters of petrol.
The approximate cost of petrol and diesel in India, at the time of writing this, is ₹70- for petrol and ₹65- for diesel. So our prospective Maruti Swift Dzire buyer's fuel bill per year will be 1559.8x65=1,01,387- for diesel or 1910.99x70=1,33,770- for petrol for one year. The difference in the petrol and diesel bill will thus be 122781-83215=32,383- per year. The difference in the initial buying price between a diesel and petrol Maruti Swift Dzire is 1 lakh (7-6 lakhs).
So our prospective Maruti Swift Dzire buyer, if he buys the petrol version of the Maruti Dzire will save in upfront payment of Rs.1,00,000- but he will spend Rs.33,383- per year extra on the cost of petrol. This means that in 100000/33383=3 years, he would have used up the money he saved in the upfront payment. Since he also saves on the interest costs on the upfront payment and thus less EMI on the cheaper petrol car, we can assume this will be 3.5 years when his extra petrol bills will be equal to the money he saved in the upfront payment. Thus the saving in the cost of petrol car in the initial purchase price will be equaled by extra petrol expenses in 3.5 years, if he is driving 100 km average daily or roughly 3000 Km monthly.
So the decision is entirely up to our prospective Maruti Swift Dzire buyer whether he wants to opt for the diesel or petrol version, but our advice in this case will be to go in for the petrol version of the Maruti Swift Dzire. Why?
Because the petrol version of the Maruti Dzire has a more powerful engine (87HP petrol vs 75HP diesel), is lighter in weight (Kerb weight 960Kg Vs 1050Kg), has better acceleration (0 to 100 KPH: Petrol 13.1 seconds or Diesel 14.98 seconds) and much better driving comfort. Maintenance costs of Diesel cars are generally higher than petrol cars. If he were driving less than the average 100 km per day then the argument to buy a petrol version becomes stronger. If the reverse was the case, that is, he is driving more than 100 km per day average, then a diesel version Swift Dzire may make more sense.
In our example above, if instead 36,000 Km per year, our prospective Maruti Swift Dzire buyer, drives only 24,000 Km per year, that is he drives about 2000 Km per month or about 67 Km a day average, then we do the same calculation as above for 24,000Km per year as follows:
For 24,000 Km per year
Diesel version of Maruti Swift Dzire will consume 24,000/23.4=1026 Liters diesel
Petrol version of Maruti Swift Dzire will consume 24,000/19.1=1257 Liters Petrol
Hence
Diesel bill is 1026x65=₹66,690-
Petrol bill is 1257x70=₹87,990-
Therefore
He pays ₹21,300- per year extra for petrol consumption and will take 1,00,000/21,300=4.69 years to equal the saving he made on the initial purchase of the car. Thus the saving in the initial cost saving on buying the petrol car will be equaled by extra petrol expenses in about 5 years, if the reduction in each EMI monthly installment is taken into consideration. So in this case the petrol Maruti Swift Dzire, is definatly the better choice if he is driving only 2000Km in a month.
Resale value of Petrol vs Diesel cars in India
The other major consideration why people tend to opt for the diesel versions of cars, is the hope of getting a better resale value for Diesel cars compared to the same model of Petrol cars. In India the resale value of Diesel cars are on an average about 10 % more than the same model Petrol car. This is a powerful argument to buy Diesel version models of cars. But consider that after say 5 years, the difference in the resale price could not be more than Rs.50,000- in our example above of the Maruti Swift Desire Diesel Vs Petrol. In our opinion the driving comfort of the 5 years he had with the petrol version of the car more than makes up for this loss in resale value. Also consider that with the dropping oil prices and the Government of India doing away with fuel subsidies, the gap between Petrol and Diesel prices in India are going to go away. In most advanced countries Diesel actually costs more than petrol.