Calculations are updated as per prices on 30 May 2014
With diesel car manufacturers luring people like crazy, the price of petrol constantly and consistently rising, and diesel engines being available in all sizes, buying a diesel car seems a superb option.
How would a layman (adept at neither finance nor automobiles) look at it?
Positives:
Diesel is almost 20 bucks cheaper than Petrol (bucks = INR).
Diesel cars yield 4-8 kms more per litre of fuel
New age diesel cars do not vibrate (or so he/she has been told)
Negatives:
Diesel car is costlier by a lakh rupees (easily)
Well, positives far outweigh the negatives. Buying is a one time expense so it doesn’t matter if diesel engines are costlier. Filling fuel is a weekly expense, throughout the life of the car. So, better get diesel! Well, there is more to this comparison than just what is above. Let us examine this question from the perspective of a car/automobile geek and a finance geek.
Finance first. Let us look at the table below. All figures are in INR. Consider the Swift’s basic model in both cases.
Now, we can calculate the cost/km in two ways. In the first, we try to determine how much the car has to be used to obtain the same cost/km in both Petrol and Diesel.
Calculating further on the lines of method 1, we get figures of 5.13/km for Petrol and 5.5/km for Diesel if the car runs 73,000 kms in a year. That's a lot of driving, trust me.
Well, now, as to which method to apply depends on the means of financing the purchase. If you have all the cash and do not have to take a loan, then you can use Method 2. If you have to take a loan, then go the way of Method 1. See how many kilometers you are likely to drive in a year and substitute the values to see which engine suits you better.
Now, let us ask the car geek what he thinks of the whole issue. A table similar to below would be what a car-o-phile will give you.
In the end, as expected, there is no clear answer. If you are willing to live with a bit of extra noise and vibration in lieu of better drive-ability and excellent mileage and, if you are a heavy user, then diesel will certainly make sense. If you are the occasional user, then a Diesel car will be expensive in the long and short runs.
Also, a thumb rule for buying a diesel car is this:
Case 1: Do you currently travel a lot by other means (for work/business) which you intend to do by car? Then Diesel may work for you.
Case 2: You do not intend to use it everyday but you will go on long drives since you have a car - if this is you then certainly, Diesel is not for you.
I recommend buying a Diesel Car only if there is an existing case for it, not a planned one.