Petrol versus Diesel Cars

[jessie007]

Petrol or Diesel car? This is the biggest question on every car buyer’s mind. I have worked out a calculator for finding out the cost of running a petrol car versus a diesel car and also to arrive at the break-even in terms of the number of kilometres. This is not a very accurate depiction, but I have tried to include all parameters and arrive at a cost of ownership as realistic as possible.

Just enter the requisite values in the boxes highlighted in yellow to arrive at the cost of ownership. One needs to enter a value in the Distance box (highlighted in yellow) to get an idea of the cost involved for running the vehicle (petrol / diesel) for that distance. The break-even point is arrived by hit and trial method by entering 2-3 values within a range to determine the approximate break-even distance in terms of kilometres travelled.

Price
Ex-showroom Delhi – taken from company’s website

On-Road Price Calculation
Registration: 4% & 5% of ex-showroom price for petrol cars & diesel cars respectively
Insurance & Misc: 4% & 5% of ex-showroom price for petrol cars & diesel cars respectively
Please note that the Insurance & Misc charges are fixed percentage estimates only for the sake of uniformity.

In the hatchback illustrated comparisons, only cars below 4 metres in length and engine capacity below 1200CC for petrol & 1400CC for diesel are considered

Average / Mileage
ARAI figures taken as a standard in order to maintain uniformity. One can assume that the difference between real-world and ARAI mileage figures would be similar for all vehicles.

Fuel Price
Current prevailing price of petrol & diesel in Delhi


Servicing Cost
Extra service cost for a diesel vis-a-vis petrol vehicle taken as Rs.9,000 (Rs.3000 each for 3 services within 3 years). This is just a guesstimate.

Interest Rate earned on cash saved on loan amount (if considered)
Interest rate on extra capital invested by buying a petrol vehicle instead of a diesel vehicle: Taken as 10% for a total of 3 years.

Although my take on this is that if a person has say a budget of Rs.5 lakhs – s/he’ll either buy a top end petrol variant or a base diesel variant which falls within the budget. I don’t think many people will buy a petrol car for Rs 4 lakhs and put the balance Rs 1 lakh in-hand in a bank fixed deposit. But anyways I believe this is called ‘Opportunity Cost’ in economics and can be considered. It is to be noted that if we consider the interest earned criteria, the break-even point increases drastically over say a five year period.

*For the illustrations I have not considered this factor and if for the calculator one wants to consider it, the following formula can be entered in cell C16 (in front of the interest earned/paid cell)
* enter =FV(G9/12,12*G11,,-C7,1)-C7 in cell C16

Interest Rate on extra loan amount
Interest rate on extra amount paid for buying a diesel vehicle: Taken as 12% for a total of 3 years on reducing balance

Resale Value
Resale value checked for a car that is 2 years old and has done 20,000 kms (rates checked on Car Wale for May 2010 manufactured vehicle). Data if not available has been taken as an approximate. Since resale value of recently launched cars is not available for later than 2 years, have taken the resale value for a one year old car.

The difference in amount between the resale value of a diesel and petrol car for a similar usage period is considered and not the actual resale value for each. This way the difference (assumed to be constant) is what matters and not the actual value, which may vary from year to year. Let’s take an example of the Swift & Figo:



One can see that, barring a variation of a couple of thousand rupees, the difference between the resale value of a petrol versus a diesel variant is similar. So the difference between resale value of two different cars (eg Swift Petrol vs Figo Diesel) will be similar for a one year old car or a five year old car.

[jessie007]

Petrol or Diesel car? Difference & break-even mileage calculator



P or D Calculator.xlsx

[jessie007]

Illustrations









Resale prices from Car Wale

[GTO]

ARAI figures taken as a standard in order to maintain uniformity. One can assume that the difference between real-world and ARAI mileage figures would be similar for all vehicles.

Do note that diesel cars are more likely to hit their ARAI mileage on the highway, and deliver numbers closer to the ARAI numbers overall than their petrol counterparts.

[shuvc]

Thanks !

Is the month/yr (10k kms) row missing in the attached excel?

[Motoringlover]

Good Model -

Suggestion - If you could edit reference in your Future value formula to look up constants from your Input variables segments, that cant help use the interest [though optional] better. Suggested edit to move the formula reference from $B$31 to column G - This will help looking at the periodic rate of interest and also recommend you do the same to calculate n periods.

Best - ML.

[aravind.anand]

I see that the price of Petrol used for calculation is Rs.70, while it has already crossed Rs.75! Can that be updated by any chance? Its a very useful file though. Thanks for sharing!

[jessie007]

Originally Posted by shuvc

Thanks !

Is the month/yr (10k kms) row missing in the attached excel?

Yes actually I had added this to give a clearer picture in the multiple illustrations. For an single calculation, one would be knowing the year for which s/he has checked the resale value. Also adding another row resulted in scrolling on my netbook - so to give a concise look, skipped this row in the excel calculator.

Originally Posted by Motoringlover

Good Model -

Suggestion - If you could edit reference in your Future value formula to look up constants from your Input variables segments, that cant help use the interest [though optional] better. Suggested edit to move the formula reference from $B$31 to column G - This will help looking at the periodic rate of interest and also recommend you do the same to calculate n periods.

Best - ML.

You are right. Actually the input/key cells were placed below the main calculator, but I copied and pasted it to the right to give the complete info without having to scroll the sheet. The valid formula will therefore be:
=FV($G$9/12,12*$G$11,,-C7,1)-C7

Will correct it in the main post soon.

Originally Posted by aravind.anand

I see that the price of Petrol used for calculation is Rs.70, while it has already crossed Rs.75! Can that be updated by any chance? Its a very useful file though. Thanks for sharing!

I have taken the fuel cost, ex-showroom and resale prices all for Delhi. Anyone can input the relevant details for any other city and get the difference/break-even details for a vehicle bought/used/sold in that city.

[gupta_chd]

The money saved from running on diesel is also going to fetch extra interest which is significant. I believe that also needs to be taken into account to get more accurate picture. However, this calculation details are commendable.

[Jignesh]

Hello Jessie,

Wonderful work. Thank you for the detailed working in Excel & all the information you have collected.

The analysis once again proves that for less running say less 12,000 kms per year, Petrol car still makes sense. What people are now-a-days considering is just running cost of Petrol & Diesel, but they somehow fail to consider the initial investment is Rs. 1,00,000 minimum for Diesel Cars & subsequent Interest for next tree years.

Thanks,

[GTO]

Thread moved from the Assembly Line (The "Assembly Line" Forum section) to the Indian Car Scene. Thanks for sharing!

[arjun_crsce]

Originally Posted by Jignesh

Hello Jessie,

Wonderful work. Thank you for the detailed working in Excel & all the information you have collected.

The analysis once again proves that for less running say less 12,000 kms per year, Petrol car still makes sense. What people are now-a-days considering is just running cost of Petrol & Diesel, but they somehow fail to consider the initial investment is Rs. 1,00,000 minimum for Diesel Cars & subsequent Interest for next tree years.

Thanks,

My friend, if you take a realistic look at petrol car mileage it is not more than 12-14 whereas for a diesel car in same category it is between 17-19. If you substitute these, look at the final figures breakeven can be as low as 25-30K kms.
Even for my case, my petrol fiesta & santro do 13 KM/L each but my friends swift D ends at 19KM/L

[nitinbose]

The overall cost difference between a Diesel and Petrol is more-or-less like saying "to rob paul to pay peter". It makes sense if the cost difference is significant. However, the purchase cost saving in petrol cars would be offset by the petrol cost while in the case of diesel, the savings you get in the long run is what you've paid extra.

The maintenance cost for both petrol and diesel cars is almost same. Yes, there would be a loss in resale value, so a petrol car is worth for people who want to keep the car for a long time while the usage is less, say around 12K kms/year at maximum.

[Alive2Drive]

This is great ! As per this sheet, I am approaching my petrol i20's break even point at a mere 29000 Kms. This is great going !! Thank god I purchased a diesel car.

[audioholic]

Regular maintenance cost for petrol and diesel are nearly the same. But if the components like injector, fuel pump, clutch, battery etc fail, diesels will be on the expensive side to maintain. The battery of the petrol swift for example is priced in the range of 4k rupees, whereas that of diesel swift costs upwards of 6k rupees approx or even more. Components like injector etc are designed to be very reliable but still in the odd times if a common rail injector fails, it is likely to cost a lot compared to that of a simple petrol injector. Agree that both are of different kinds, but in the end, you just cant predict what may happen if times are not good. Same for the clutch too. Next comes the turbo. If such components ever fail, then the costs will be considerable enough to affect the cost calculation. Just that we must hope such things wont happen in the longrun. A friend of mine bought a diesel verna which had a conked turbo. He had to shell out an amount of around 80k to get it fixed. The previous owner had done 33k and was not willing to accept reimbursement of repair charges. Unless one has a very high running to offset all these costs, then diesel will make good sense. So, we must keep these aspects in mind too.

Just my two cents.