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Old 17th September 2012, 11:45   #46
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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Originally Posted by blackasta View Post
...people buying diesel cars just to enjoy the cheap diesel - that is plain wrong. The subsidy meant for something else is being misused.
Hello sir, it is not 'plain wrong'. Govt. is giving you an option to run on cheaper fuel. You can always choose to sell your petrol car and buy a diesel car. Who is stopping?
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Old 17th September 2012, 12:00   #47
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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Originally Posted by blue_pulsar View Post
Hello sir, it is not 'plain wrong'. Govt. is giving you an option to run on cheaper fuel. You can always choose to sell your petrol car and buy a diesel car. Who is stopping?
I have tried to stress enough on this point - and I shall say it again - govt subsidy on diesel is meant for farm/public transport/long haul/railways usage. As the govt has not found out any foolproof method to distinguish the distribution of diesel between private vehicle use and intended subsidized use - the use of subsidized fuel is rising for personal use.

Govt is not giving you an option of cheap diesel - govt doesn't have any suitable means to distinguish and give you regular diesel at market price while others who truly need subsidized diesel at a cheaper price.

By 'plain wrong' - I meant the above. Not that you are committing a crime.
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Old 17th September 2012, 12:11   #48
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

If the subsidy is to be maintained for freight, agriculture, and railways, the only solution that will work is a one time fuel tax on diesel vehicles. If the manufacturers are complaining, they have a right to. In the west, when policy changes that will affect manufacturer investments are made, they are made into law with long lead times. That gives manufacturers the chance to do proper long term investment and planning.

The Indian system of random arbitrary policy changes that become effective immediately are a disaster for the country economically, but our stupid politicans are only interested in what laws they can benefit from now, and have no vision of governing and legislating with a long time horizon.

The result is that in case the thieves in government ever decide to do something, they get opposition from industry that needs long lead times. And its a weird dynamic. On things that they want to do for their own political benefit, they'll do it, no matter how much companies scream about bad policy. When they are not particularly interested in expending political capital on some policy, they become highly conscious of industry opposition (no doubt helped along by bribes paid by private industry to politicians threatening obstructive policy, which is normal in India).

The correct thing to do is pass a law that will set a time horizon (say 5 years) for the solution. Not government policy that the next (or same) government can change by whim, but law, made in parliament. And make it in consultation with the industry and various stake holders so its not arbitrary.

but thats not going to happen. because our legislators have never done their job well. There is no reward for them if they do their job well, and there is no penalty if they don't. Quite the opposite in fact.

Last edited by Harbir : 17th September 2012 at 12:16.
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Old 17th September 2012, 13:55   #49
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

I feel that the diesel car would be the preffered vehice for a long time to come.

Even if Diesel and petrol are sold without any subsidy Diesel will be cheaper than petrol because the cost of refining diesel is cheaper than petrol. Next you get better milage with Diesel.
Putting both together from a fuel perspective we would be making a profit buying a diesel in terms of daily running
Also the resale value for a Diesel is better
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Old 17th September 2012, 14:08   #50
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

Look at the west. In Europe (except possible France) Diesel costs the same or is marginally costlier than Petrol. Even then Diesel cars outsold petrols last year. It is primarily because high mileage motorists found the more efficient Diesels cheaper to run.

I do not expect Petrol to be priced comparably to Diesel given our agrarian economy in the next decade at least. However, the price gap will narrow over time.
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Old 17th September 2012, 14:14   #51
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

Diesels sill give better fuel effeciency than petrols and also are more fun to drive (due to much higher torque figures) for some (in todays times most in my view) vehicles.

The diesel car turbo boost is the common man's way of getting the pseudo super car push back into the seat. The Quadraj engines from Fiat that Maruti and TATA use are more fun to drive than their own petrol options in the same vehicles.

Add to this the still significant 30% difference in pricing I believe we will be moving more and more towards Diesel Vehicles in the longer run - for good or for bad.
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Old 17th September 2012, 14:25   #52
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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Diesels sill give better fuel effeciency than petrols and also are more fun to drive (due to much higher torque figures) for some (in todays times most in my view) vehicles.
that is true only in the case of mediocre to poor petrols.

Diesels cannot hope to produce the pleasures of good petrols. Since diesels are almost always turbos and petrols in India almost never are, comparing petrol to diesel for driving fun isn't really fair.

Drive 2.0 Turbopetrol jetta (not offered here) and a 2.0TDI jetta, or a 3.0 Turbo petrol 3 series vs a 3.0 Turbo Diesel 3 series and if you tell me the diesels are more fun, I'll eat my hat.

Last edited by Harbir : 17th September 2012 at 14:26.
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Old 17th September 2012, 14:38   #53
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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Originally Posted by sgiitk View Post
Look at the west. In Europe (except possible France) Diesel costs the same or is marginally costlier than Petrol. Even then Diesel cars outsold petrols last year. It is primarily because high mileage motorists found the more efficient Diesels cheaper to run.

I do not expect Petrol to be priced comparably to Diesel given our agrarian economy in the next decade at least. However, the price gap will narrow over time.

I am not going to get into the timeline of things.

I will just submit this much, when MS was the FinMin in PVNR cabinet nobody could have forecast-ed the economic scenario we have today.

On a similar note, events that we are ignoring or not counting as of enough import will have a cataclysmic impact and will cause paradigm shift in the whole energy space. That will cause this skew to vanish much sooner than most anticipate.
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Old 17th September 2012, 14:40   #54
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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Originally Posted by Harbir View Post
that is true only in the case of mediocre to poor petrols.

Diesels cannot hope to produce the pleasures of good petrols. Since diesels are almost always turbos and petrols in India almost never are, comparing petrol to diesel for driving fun isn't really fair.

Drive 2.0 Turbopetrol jetta (not offered here) and a 2.0TDI jetta, or a 3.0 Turbo petrol 3 series vs a 3.0 Turbo Diesel 3 series and if you tell me the diesels are more fun, I'll eat my hat.
On a lighter note: The Turbo Petrols that you mention would Eat our Pockets out though as compared to the Diesels. I did mention the words "Common man" and he does want to have his fun without a huge dent in the pocket.

At the other extreme:
The Latest Audi / VW advts. Tom Toms the Diesels that have won them the 24 hrs Le Mans multiple times in recent years. (R10 & R15 TDi units) that have been winning each year since 2005 in the 24 hrs Le Mans. They also managed to make these light weight Diesels and are positioning them as the future of racing. Yep F1 is still only Gasoline but then there is the Le Mans example as well.

Yep there are petrol lovers and there will always be but then there are diesel lovers like me too.
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Old 17th September 2012, 14:49   #55
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

This is all true only when taxation distorts the comparative costs of the two vehicles. Which is more economical to run in passenger cars is a matter of the regulations in any given country.

When difference caused by that are not taken into account, petrols will always outdo diesels. Its all down to the physics of their combustion. Petrol vaporizes and can burn instantaneously. Diesel doesn't vaporize fast enough for automotive engines. It is only broken down into a fine mist of diesel droplets that burn from the outside towards the inside. This means diesel engines can never rev like petrols, and despite the greater thermodynamic efficiency of the carnot cycle of the diesel engine and the greater energy content of diesel fuel per unit volume, diesel engines do not produce more power than petrols (assuming everything else is the same). The fuel just can't burn fast enough. This sluggish revving means that diesel engines can never have big rpm bands to play with, and when other things are constant (say both are turbo or non turbo) it means diesels can never have the sort of throttle response that petrols do. And there is no getting away from the NVH characteristics that arise from burning a mist vs burning a vapor (the characteristic clattering sound and vibration of the diesel.) Sure they can be very fast (as the diesels in Le Mans testify), but when economy differences caused by government regulation are taken out, petrols always win for driver appeal.

In India, because fuel price differences makes petrols 4-10 lac price range uneconomical and because even those who buy 50 lac rupee cars are very kanjoos (we call it being careful in money matters), diesels have won the market. If this distortion caused by differential taxation of the fuels disappears, the so called "more fun to drive" we hear about diesels will disappear.

Last edited by Harbir : 17th September 2012 at 15:03.
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Old 17th September 2012, 15:52   #56
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

In my opinion, the current diesel hike is not going to make a huge impact on the sales of diesel cars as the difference in price between Diesel and Petrol is still significant.
Fellow Team-BHPians please share you thought on this - As there has been a steep increase in price of Premium petrol/diesel is it possible for the government to restrict the sale of subsidised diesel and force private car owners to buy premium diesel?
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Old 17th September 2012, 17:22   #57
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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congress is all set to lose 2014 anyway barring a miracle and if the economy does jump back, then may be ....
There are no options and there shall be another Cong with coalition. Don't want to get further into this political discussion...

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But we digress, if you had a friends asking for advice on which car to buy and the guy would use the car for more than 10k km/year, what would you advice - a Swift petrol or a Swift diesel (basically petrol vs. diesel version of the same car)?
Depends...For some diesel still is expensive to maintain in the long run. I try to push for petrol Cars, less waiting, discounts...

My running too is erratic, hence I got the diesel.
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Old 17th September 2012, 17:45   #58
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

Let us discuss some real world examples. Let us compare the petrol and diesel swift. I am taking onroad prices (delhi) and as tested fuel economy from Autocar India.

VXI: 5.4 lacs, City 12.6km/l, highway 17km/l
VDI: 6.6 lacs city 14.6km/L, highway 19.5km/l

lets say the overall is the average of city and highway: then VXI is 14.8km/L, VDI is 17.05km/L

lets say that the lifetime of the car is 150,000km. So the total fuel used would be:

VXI: 10,135litres
VDI: 8,798 litres.

Now, let us figure out how much money in taxation the diesel buyer avoids paying into the public treasury:

Petrol price: 72 rupees
Diesel price: 45 rupees

Difference = 27 rupees per litre.

Total amount of money not paid as tax on 8, 798 litres = 237, 546.

SO the buyer of the diesel swift is paying 2.37 lacs less in fuel taxes than the petrol.

If we have one time taxation at purchase time to ensure that the tax gets paid, the price of the Diesel swift would be 6.6lacs + 2.4 lacs = 9lacs.

So if both diesel and petrol buyers pay the same rate of fuel tax the cost of the models would be:

VXI: 5.4lacs
VDI: 9 lacs.

Note, even so the diesel user pays less fuel tax (as opposed to tax rate), since he pays the same rate per liter but for fewer litres.

You think the VDI would sell vs the VXI because of its 2km/l advantage and the lower cost of diesel fuel? Not a chance in hell!

The argument has also been made that even if fuel prices were the same, the diesel would still sell because of better fuel economy. Lets figure it out:

Price of both fuels: 72 rupees per litre.

VXI fuel cost = 10,135 litres x 72 rupees per litre = 7.30lacs
VDI Fuel cost = 8798 litres x 72 rupees per litre = 6.3lacs

Cost of car plus cost of fuel:

VXI = 5.4 + 7.3 = 12.7 lacs
VDI = 6.6 +6.3lacs = 12.9 lacs.

Are diesels really more economical? NOPE. Not unless government policy favors diesel cars.

And this does take into account the higher diesel maintenance costs. Also, obvious assumptions (current fuel price assumed for the entire life of the car, and time value of money not accounted for.)

Last edited by Harbir : 17th September 2012 at 18:03.
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Old 17th September 2012, 17:55   #59
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

The issue is not just reducing subsidy by increasing the diesel price, the situation is much more complex.

The entire goods and transportation sector runs on diesel. Even railways use diesel extensively. So a rupee raise in diesel has a cascading effect on all the commodities due to our fantastic distribution network.

All essential commodities prices will increase otherwise truckers will go on strike. There is no rationale in terms of % of increase getting passed on. If diesel increases by Rs.5. then these crooks will increase the price of veggies by 5 citing increase in transport cost.

There are no checks and balances to ensure a logical pass over of increase.

But the bottom line being govt. not interested in proper solutions, only doing patch work(tooth-patti) for time-being. All they are interested are filling their pockets !!

Irony being on one hand they say they are giving subsidy. on the other hand they are taking taxes on fuel. So doesn't it even out why such a huge fuss!!

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Old 17th September 2012, 18:05   #60
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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Originally Posted by Harbir View Post
This is all true only when taxation distorts the comparative costs of the two vehicles. Which is more economical to run in passenger cars is a matter of the regulations in any given country..
Even in countries where petrol and diesel cost same, diesels are cheaper to run. A diesel engine if inherently more fuel efficient than a petrol.
In large vehicles, petrols can barely manage 11-12kmpl, however, diesels can often give you 14-15kmpl
That is the reason, Europe is primarily a diesel market.
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