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Old 23rd September 2011, 18:10   #16
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Default Re: Break even in diesel with just 450km/month (a different approach)

Well there are many ways to look at numbers and presented in a different way they can tell a completely different story.

I drive for ~900 km a month and have bought a petrol car. The equivalent diesel model was priced Rs. 1.5 lakh higher (6.75 vs. 8.25 L). Government policies are very fickle and with tumultous global economy you never know what will happen to fuel prices, interest rates, annual tax on private diesel vehicles and God knows what not. So with my running, i felt prudent to save 1.5L and use it fund my petrol purchase for next 2-2.5 years.

Post that hope that if petrol rises 10% hope salaries rise by 10% as well. Enjoy the drive till then.

~maniac
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Old 23rd September 2011, 18:16   #17
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Default Re: Break even in diesel with just 450km/month (a different approach)

Quote:
Originally Posted by neo45007 View Post
The question is : Considering the Petrol Vs Diesel Prices now;

should people like me who own 1-2 yr old Petrol car - replace their cars by diesel version ?

When I am driving 1500 Kms a month, running costs for me with Petrol Car are very high today.

Any suggestions ?
The higher the segment, that is the bigger the car, the faster you recoup your investment with diesel. If you have a small hatch giving 15 km/l, a diesel hatch will give 20 at the most in the same conditions. But if you have a large car giving 8-10 in city, a diesel may increase it to 15+ under same driving conditions. For SUV it is a no brainer as the petrol versions consume 2+ times more fuel.

So even if diesel were priced at par with petrol you gain in terms of FE with diesel, and you are doing your bit to decrease the fiscal deficit (less fuel import!)

At your running a diesel makes sense. Please find out how much extra you will have to pay for a new diesel car after selling your current petrol car. If you have insurance from normal company, your no claim bonus will be transferred to the new car (some relief!), that is the capital cost. For running costs calculate the diesel bill for 1500 km/month and subtract the petrol bill. That will give you monthly savings, so now you know how long it will take you to recoup your investment. In the long run you will always come out on the top, as fuel prices are always moving north.
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Old 23rd September 2011, 19:37   #18
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Default Re: Break even in diesel with just 450km/month (a different approach)

File updated.
Petrol vs diesel.xlsx
New additions
Rs/Km.
Monthly expense.
Better formatting.


Quote:
Originally Posted by serious_maniac View Post
Well there are many ways to look at numbers and presented in a different way they can tell a completely different story.
I drive for ~900 km a month and have bought a petrol car. The equivalent diesel model was priced Rs. 1.5 lakh higher (6.75 vs. 8.25 L). Government policies are very fickle and with tumultous global economy you never know what will happen to fuel prices, interest rates, annual tax on private diesel vehicles and God knows what not. So with my running, i felt prudent to save 1.5L and use it fund my petrol purchase for next 2-2.5 years.
Pos t that hope that if petrol rises 10% hope salaries rise by 10% as well. Enjoy the drive till then.
~maniac
It is because you are not looking at the full picture.
Anyway looking from your perspective, may be you can utilse the 1.5L (btw which one has 1.5L difference. Is it I20?) but after 4 years when your fund is over, the diesel will fetch you more if sold.



Quote:
Originally Posted by Aroy View Post
The higher the segment, that is the bigger the car, the faster you recoup your investment with diesel. If you have a small hatch giving 15 km/l, a diesel hatch will give 20 at the most in the same conditions. But if you have a large car giving 8-10 in city, a diesel may increase it to 15+ under same driving conditions. For SUV it is a no brainer as the petrol versions consume 2+ times more fuel.
Agreed but someone spending 20L on a SUV should not be worried with 50K on fuel per year. But several Indians are. Although I admit diesel SUVs are a much better proposal due to their low end torque.



As for replacing a new petrol car with diesel is concerned,
I see it from a clean slate. Will I buy a used petrol (that I currently own) which is equivalent to retaining or go for a new diesel.
New diesel car costing 7L. (same segment)
Petrol car resale 5L (1 year old)
Km/month 1500
Depriciation 10% for both petrol & diesel (higher depriciation of petrol is nullified for retaining the car)

Break even in diesel with just 450km/month (a different approach)-replacing-diesel.png
At the end of 5 years you can save 1.5L. Not insignificant by any means.
so @ Neo, may be it is wise to go for a change.
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Old 26th September 2011, 11:40   #19
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Default Re: Break even in diesel with just 450km/month (a different approach)

@oxygen: Thanks for the calculations.
One question: Where do you factor in the initial difference in amount when you buy the petrol car as against the diesel one?

E.g. 5 lac petrol v/s 6 lac diesel. This results in saving of 1 lac which goes into fixed deposits at 10% now a days for senior citizens.
I haven't understood the calculations in H24, but I assume you are trying to get cumulative interest of 8% there for 4 years.
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Old 3rd December 2011, 23:38   #20
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Default Re: Break even in diesel with just 450km/month (a different approach)

Quote:
Originally Posted by S_U_N View Post
@oxygen: Thanks for the calculations.
One question: Where do you factor in the initial difference in amount when you buy the petrol car as against the diesel one?

E.g. 5 lac petrol v/s 6 lac diesel. This results in saving of 1 lac which goes into fixed deposits at 10% now a days for senior citizens.
I haven't understood the calculations in H24, but I assume you are trying to get cumulative interest of 8% there for 4 years.
Sorry for the late response.
I am trying to get cumulative interest of 8% for 4 years.
As for your question it is: H4-H17.

As for H24 think of it as the money (in today's value) you are spending for the car.
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Old 4th December 2011, 01:44   #21
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Default Re: Break even in diesel with just 450km/month (a different approach)

oxyzen, no matter what calculations says, owning a petrol car is psychologically big blow to your mind when you run your car for even for 600-700 kms every month. If you have to travel 200 kms cost difference between petrol and diesel car is huge, psychologically its destroying and will ruin whole joy of your journey. IMO, it do make lots of sense owning diesel car over petrol.

For example, my jym is 12 kms round trip, if i have to drive my car it cost me Rs.75 every day just to go to my jym. Now, If my attendance is even 180 days a year my petrol cost for going to jym is Rs.13500/year which is more then I pay for my jym fees Rs.10500/year. If it was diesel, it would just cost me Rs.6480 / year which is nearly half the cost of petrol and hence I can now exercise more .

Above is just one example, its the same story for many other short drives. If you think I am wrong, just take a look at waiting period for diesel cars. This is how humans think, one time cost of car is considered as money well spent on luxury item like we do on mobile phone or other fancy items or travel, but if recurring / running cost is high it definitely effects monthly budget which destroys peoples mind set and ruin joy of owning a car.
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Old 4th December 2011, 02:47   #22
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Default Re: Break even in diesel with just 450km/month (a different approach)

Quote:
Originally Posted by oxyzen View Post
Well the recent price hike is not helping much to the sales of petrol cars. Just out of curiosity I decided to dig a bit deep into the total cost of ownership and take a pragmatic approach to calculate the minimum kms needed to go for a diesel.

The reason for creating a new thread here, is to ask fellow BHPians for their opinion about this approach. I know there are a lot of loopholes and I am willing to rectify in case I missed something of considerable interest.



Basic Assumptions
:
  • Interest on investment is calculated at 8% compounded annually.
  • Petrol costs = 70/Lt FE=12
  • Diesel costs = 42/lt FE=15
  • Assumed that the car is bought on full down payment. I have omitted Emi as that made the sheet highly cumbersome.
  • Fuel costs:
1. The money spent on fuel is supposed to earn 8% annually if invested in FD (for ex).
2. The fuel costs (for both petrol & diesel is expected to increase by 8% annually)
  • The same goes for (maintenance+ insurance + repairs) as well.
Attachment 613299


The values shown are cumulative. And it shows the amount by which you could have been wealthier, in case you invested the money at a regular 8% interest, after certain years.

So 27L may sound a lot now. But after 10 years is will not be that huge.

Conclusion
  • To get to break even, a mere 450km/month is enough. (Time frame not important)
  • It is wrong to try to offset just the difference in initial cost using fuel bills. Depreciation is hardly anybody's concern. In case you sell the car early you get back most of the amount you paid extra for the diesel. (Highly not recommended)
  • What should be compensated is mainly the interest / investment opportunity lost in the price difference.
  • But even with 900km/month running, the extra cost incurred in petrol is only 10% of the total cost of ownership. So for those who are obsessed with petrols motors only need not .
  • With 1500km/month the extra cost is approximately 20%. Thats just a footstep towards the next segment.
Bottomline:
People crib about higher running costs in a petrol.
But not in going up a segment higher.


The excel file is attached for you to fiddle with the values.
Attachment 613300
Sorry for making it too complex.
I kind of stand corrected (the other thread).

Some comments:

(1) I think you should use 12% to 14% as the rate of interest (opportunity cost for most people - repay the home loan, or pay less auto loan ...)
(2) On the other hand the FE difference is much starker than you have mentioned under similar driving conditions. Many people are getting 17-19 from diesels in driving conditions where they wouldn't hope for 12-14 from petrols.
(3) I liked your overall conclusion also - while the diesels are cheaper overall, the difference is not so much that people should kill the fun if they like petrol motors better. Of course this works in the other direction too - I bought Figo TDCi (even though at that time it was between 5-10% more expensive vis-a-vis petrol) because I liked the diesel engine better and had to go for a Figo.


Overall one thing you didn't mention - your analysis means that petrol segment is DEAD.
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Old 4th December 2011, 08:46   #23
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Default Re: Break even in diesel with just 450km/month (a different approach)

Firstly appreciate your calculations.

However, in my opinion this calculation is a bit skewed. IMO you need to consider the financing is done with the current interest rates at 12-13%. Then other things like period maintenance for the petrol and diesel. Interest paid for additional downpayment and opportunity interest lost due to the additional downpayments also needs to be considered.

When all these are taken into picture. This would bring about a lot of changes into your calculation.
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Old 4th December 2011, 09:59   #24
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Default Re: Break even in diesel with just 450km/month (a different approach)

That is what exactly the doctor ordered !
Commendable analysis by Oxyzen and I bet it is actually an eye opener for people like me who is in a dilemma about the petrol v/s diesel criteria.

I am actually in search for a hatchback and diesel is somewhat the first choice inspite of not having great running requirement. Cars like i20,Swift,Figo and Ritz are prime contenders.

So why diesel if the running isnot high ?

- To be honest, new diesel can actually be bought just for the fun factor alone. The real world performance is actually C segment petrol equivalent or even better ! Just like Swift DDiS or the i20 CRDi. They are quite a performer on highway.

- Extra lakh or so you pay for a diesel is justified. In some cases you get a car with higher cc/bhp/torque. i20 1.4 CRDi v/s i20 1.2 Kappa. Vista 1.3 QJd v/s Vista 1.2 Saffire. Punto 1.3 Mjet v/s Punto 1.2 Fire. What you get is a more powerful and bigger engine. It is quite reasonable for a engine upgrade alone !

But the analysis can go for toss if govt's policy changes.
- Remove the subsidy for Diesel. This is highly unlikely because diesel is very dependable fuel for mass/goods transportation(train/bus/truck),farmers etc. Any hike will change things drastically.

- Dual fuel price policy. This is actually a recipe for disaster in a country blessed with corruption tactics.

- Special tax on Diesel vehicles. If it is 50Ks or more, the analysis will need some revision. Again higher road tax,insurance and registration for a car that is already 1 lakh rupees higher than its petrol counterpart. Spare parts costs may go up too. Resale value will be interesting !

- Yearly tax on diesel vehicles purchased after the implementation of the policy. Again calculations will depend upon amount of tax and kms run. Lesser your yearly mileage is, more you are at loss. So running then will matter for sure.
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Old 4th December 2011, 10:41   #25
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Default Re: Break even in diesel with just 450km/month (a different approach)

Quote:
Originally Posted by vina View Post
(1) I think you should use 12% to 14% as the rate of interest (opportunity cost for most people - repay the home loan, or pay less auto loan ...)
Quote:
Originally Posted by nkrishnap View Post
However, in my opinion this calculation is a bit skewed. IMO you need to consider the financing is done with the current interest rates at 12-13%. Then other things like period maintenance for the petrol and diesel. Interest paid for additional downpayment and opportunity interest lost due to the additional downpayments also needs to be considered.
Dont worry guys. New sheet with EMI option is ready. Will post soon.
The new sheet will be even more user friendly. More on that later.


Quote:
Originally Posted by nkrishnap View Post
Interest paid for additional downpayment and opportunity interest lost due to the additional downpayments also needs to be considered.
That is already there.

Last edited by oxyzen : 4th December 2011 at 10:43.
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Old 4th December 2011, 17:16   #26
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Default Re: Break even in diesel with just 450km/month (a different approach)

Thanks oxygen. Will wait for the new version. Meanwhile, I must say, that with a Diesel car, there is a tendency to travel more. With a petrol car, one thinks twice and if possible goes through a train. In short, the running goes up magically with a diesel car, whereas with a petrol car, you have to control the urge to drive.
That IMHO tilts the balance back to petrol's side.
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Old 4th December 2011, 20:47   #27
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Default Re: Break even in diesel with just 450km/month (a different approach)

Quote:
Originally Posted by Max View Post
oxyzen, no matter what calculations says, owning a petrol car is psychologically big blow to your mind when you run your car for even for 600-700 kms every month. If you have to travel 200 kms cost difference between petrol and diesel car is huge, psychologically its destroying and will ruin whole joy of your journey. IMO, it do make lots of sense owning diesel car over petrol.

For example, my jym is 12 kms round trip, if i have to drive my car it cost me Rs.75 every day just to go to my jym. Now, If my attendance is even 180 days a year my petrol cost for going to jym is Rs.13500/year which is more then I pay for my jym fees Rs.10500/year. If it was diesel, it would just cost me Rs.6480 / year which is nearly half the cost of petrol and hence I can now exercise more .
Take a bicycle instead a car. That way, you would even save on your gym's fees

Irrespective, the Govt's irrational pricing policy of fuels has created some unique situations for consumers. Things shall only get worse with a government who cannot more quickly on decisions and is more intent in remaining in power than on fulfilling day to day tasks and improve the lives of Indians.

In my case, the consequences are even more alarming. I have a CNG Alto and a Yamaha SZ bike and it is cheaper for me to run my car than my bike!!! In my car, I have music, aircon, safety, low noise and pollution, etc. The only advantage of the bike is it can slice through traffic like a hot knife through butter and the drive is more involving.

So in my case the decision is simple: it's always going to be the car and the bike only for short errands or weekend rides.
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Old 4th December 2011, 20:59   #28
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Default Re: Break even in diesel with just 450km/month (a different approach)

Its said that if a person has a travel of around 60kms per day or more then it is wise to choose a diesel over a petrol with respect to the additional costs incurred in buying a diesel car with the same features when compared to a petrol engine one.

Same happened with me too. Chose the Ritz VDi since i have a monthly travel of 3600kms i.e. 120kms a day!

Diesel stands cheap on my wallet too.
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Old 4th December 2011, 21:01   #29
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Default Re: Break even in diesel with just 450km/month (a different approach)

Quote:
Originally Posted by Max View Post
oxyzen, no matter what calculations says, owning a petrol car is psychologically big blow to your mind when you run your car for even for 600-700 kms every month. If you have to travel 200 kms cost difference between petrol and diesel car is huge, psychologically its destroying and will ruin whole joy of your journey. IMO, it do make lots of sense owning diesel car over petrol.
Absolutely!!
For a diesel you cry just once when you buy the car. In a petrol each and every trip to the petrol station hurts. And this is why most sedans are diesels. People who buy sedans can afford to increase their budget by 1L. And so they can have the peace of mind in filling stations. Scientifically foolish but psychologically true. Very true!!


Quote:
Originally Posted by S_U_N View Post
Meanwhile, I must say, that with a Diesel car, there is a tendency to travel more. With a petrol car, one thinks twice and if possible goes through a train. In short, the running goes up magically with a diesel car, whereas with a petrol car, you have to control the urge to drive.
That IMHO tilts the balance back to petrol's side.
Quite right.
Moreover if you are staying with friends. For any trip the diesel will be the pick. People with their petrol motors can relax.


Quote:
Originally Posted by vina View Post
(2) On the other hand the FE difference is much starker than you have mentioned under similar driving conditions. Many people are getting 17-19 from diesels in driving conditions where they wouldn't hope for 12-14 from petrols.
Hmm.. My beat delivers 13 and the Vento on the same track is now delivering 16-17. I dont see why it cant be 17-19 with a hatch back.

Quote:
Originally Posted by vina View Post
Overall one thing you didn't mention - your analysis means that petrol segment is DEAD.
Not really. If you like petrol, you can buy it. Sure there will be a financial loss but it is only marginal when compared to the total investment. But yeah looks like with diesels there is nothing to loose (atleast with the current scenario).

Quote:
Originally Posted by Turbokick View Post
- To be honest, new diesel can actually be bought just for the fun factor alone. The real world performance is actually C segment petrol equivalent or even better ! Just like Swift DDiS or the i20 CRDi. They are quite a performer on highway.
For most but not for all cars. Eg Polo, Fiesta classic, Linea T-Jet, Corolla, and that's about it.

Quote:
Originally Posted by Turbokick View Post
- Extra lakh or so you pay for a diesel is justified. In some cases you get a car with higher cc/bhp/torque. i20 1.4 CRDi v/s i20 1.2 Kappa. Vista 1.3 QJd v/s Vista 1.2 Saffire. Punto 1.3 Mjet v/s Punto 1.2 Fire. What you get is a more powerful and bigger engine. It is quite reasonable for a engine upgrade alone !
Thats why I am surprised with Beat. It has lesser capacity. Why could not they price it lower or same as the petrol. Look at figo; there it justifies its premium with extra 200cc.

Quote:
Originally Posted by Turbokick View Post
But the analysis can go for toss if govt's policy changes.
- Remove the subsidy for Diesel. This is highly unlikely because diesel is very dependable fuel for mass/goods transportation(train/bus/truck),farmers etc. Any hike will change things drastically.
- Dual fuel price policy. This is actually a recipe for disaster in a country blessed with corruption tactics.
Anything can happen in this country.
Specially with the current govt. 2G scam, commonwealth scam, 50% kota, inflasion and what not. Anything that can increase corruption is whole heartedly accepted by govt. Dont just write off dual pricing.
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Old 4th December 2011, 21:09   #30
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Default Re: Break even in diesel with just 450km/month (a different approach)

Great Analysis but why have u taken more maintenance for diesel vs petrol. Nowadays the service intervals are largely same as well as 1lakh km abd 2/3 year waranties take care of the large expenses.

I had done similar workings as was using a 2005 ikon petrol for a monthly commute of 1.5k kms as well as had a Petrol Fiesta for weekend drives. Monthly petrol bill of 12k plus.
I am selling off my Ikon for 85k and already bought a 2007 end Ford Fusion TDCI for 3.7L on cash which had 35k on the odo. Monthly fuel bill has dropped to 5.5k. I toyed with the idea of buying a new diesel but then decided that its better to go for a cheaper used one without a loan rather than buying a expensive new one on a loan.
I have now 3 fords currently.....
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