[sgiitk]

This morning Brent breached $101 on the downside (it is again up to 101+), and the OMC claim a loss of 8p per litre. Now they re worried about the private players (read RIL) undercutting them at the pump. Also, a cabinet note is being prepared for the deregulation. So all signs are there. Fingers (and toes) crossed.

[embee]

A diesel vehicle means higher cost of acquisition but significantly lower fuel bills, right? Well, not quite. Thanks to falling petrol prices and rising diesel fuel costs in recent months, the petrol-diesel gap is now at its slimmest..

This article I came across in Times of India...
http://timesofindia.indiatimes.com/b...w/41554062.cms

[dass]

Not everyone buys a diesel car for low cost of fuel.

I for one, have always had preference for Diesel, even during the time when petrol and diesel were under the government control and were priced pretty close to each other. I have driven many petrol cars and have never been comfortable, but put me in a diesel and I instantly feel at home. Tomorrow, even if diesel is costly than petrol, I am sure I would go for a diesel car, for I love the low end torque and the ruggedness of a diesel car. I am sure there are many others like me out there.

[Vik0728]

Guys many people buy Cars and most buy them as a necessity rather than a fashion statement. But..
‘A Bhpian buys a car to satisfy the Petrol-head inside’ !!

Jokes apart guys, I am no expert and neither am I taking any side here, but having driven/owned/loved high revving petrol engines all my life, this is what I think of owning my first diesel car:

1. Somebody who has owned a Naturally Aspirated (N.A) petrol engine must try a really rev happy Diesel Engine once. The fun factor cannot be explained and must be experienced. No matter how good, how high revving or how mod friendly a N.A engine is, it will still not give that ‘Spine Tingling’ feel of an accelerating-turbo spooling-rush inducing diesel engine.
2. The previous point is rendered ‘Pointless’ if the same ‘Somebody’ has owned/driven/experienced a T-jet or TSI. The ones who have will care less if someday Diesel is offered free with Bisleri water. No matter how good a Turbocharged Diesel engine will be, it will not offer the ‘Spine Tingling’ feel of a high revving Turbocharged Petrol engine.

The bottom line folks is that a Wise person will follow his Mind, but a Petrol-head must always follow his Heart, whichever way it beats !!

[Mohan Mathew A]

Originally Posted by Desi Dybuk

So, to recover 1 lakh premium you paid for Diesel, you'd have to drive an additional 1,00,000/2.26 = 44,247 kms.

Since you drive about 20,000 kms per year, you'd have to keep your car for 2 additional years!

Mind you, I have not included the additional financing cost, lost interest on money saved if you go for Petrol, possibility of Diesel & Petrol prices coming even closer due to Diesel deregulation.

Slightly OT

Sorry, the math doesn't add up.

Keeping all your assumptions the same, he doesn't have to drive an additional 44,247 km, he just have to drive 44,247 km to break even.

let me explain

Running cost for 44247 km

For petrol; 44247*6.26=276986

For diesel:44247*4=176988

Difference in cost=99998

i.e with the current running (again keeping all assumptions the same) he would have recovered the additional amount in 2 years and a couple of months.

[Hayek]

Find it surprising that people focus this calculation on a break even point to recover extra upfront cost, as if the residual value of a car is zero. Cars are depreciating assets, but will be worth something at the end of any users planned holding period.

So how should you look at the calculation? Look at the cash outflows and inflows in each case.

If you buy a car, you pay the OTR price up front, and pay fuel and maintenance costs each year. Finally, when you sell the car, you recover its residual value. The impact of all of this depends on your cost of capital - which would be upwards of 10%pa under the current interest rate regime in India.

By comparing the NPV of using a diesel car and a petrol car, you can assess the break even point where diesel becomes better than petrol.

For example for my Skoda Superb, I paid Rs. 22.5 l OTR. With my running of 9000 km p.a., petrol prices of Rs. 76 per litre, and fuel efficiency of 7.1 km per litre, fuel cost is about Rs. 95,000 p.a. With a 6 year holding period, and assuming I recover 35% of the upfront cost when I sell the car, my NPV cost of ownership of the car is about Rs. 20.2 l (ignoring maintenance, insurance etc.).

The diesel Superb would have cost Rs. 3 l more, but had an annual operating cost of only Rs. 60,000 p.a. (Assuming 9.5 kmpl mileage, and Rs. 64 per litre diesel price). Assuming the same holding period and residual value, the cost of ownership would have been Rs. 21 l, or Rs. 80k more.

The break even mileage here would have been about 14,000 km pa. Of course that was a lot less a while back when diesel cost over Rs. 20 per litre cheaper than petrol.

[Desi Dybuk]

Originally Posted by Mohan Mathew A

Slightly OT

Sorry, the math doesn't add up.

Keeping all your assumptions the same, he doesn't have to drive an additional 44,247 km, he just have to drive 44,247 km to break even.

let me explain

Running cost for 44247 km

For petrol; 44247*6.26=276986

For diesel:44247*4=176988

Difference in cost=99998

i.e with the current running (again keeping all assumptions the same) he would have recovered the additional amount in 2 years and a couple of months.

Hmm. I think you may be right. I might have misinterpreted the numbers. Diesel vs Petrol isn't as black vs white as it seemed then.

[blacksport]

Originally Posted by dass

Not everyone buys a diesel car for low cost of fuel.

Not everyone, true, but members of your tribe is too few.

I for one, have always had preference for Diesel, even during the time when petrol and diesel were under the government control and were priced pretty close to each other.

I can't recall a period between 1992 and today where diesel and petrol were priced close to each other. The gap in the past was huge and only started narrowing in the last few years. Would like to know which era you are referring to.

Originally Posted by Vik0728

Guys many people buy Cars and most buy them as a necessity rather than a fashion statement. But..
‘A Bhpian buys a car to satisfy the Petrol-head inside’ !!

Jokes apart guys, I am no expert and neither am I taking any side here, but having driven/owned/loved high revving petrol engines all my life, this is what I think of owning my first diesel car:

1. Somebody who has owned a Naturally Aspirated (N.A) petrol engine must try a really rev happy Diesel Engine once. The fun factor cannot be explained and must be experienced. No matter how good, how high revving or how mod friendly a N.A engine is, it will still not give that ‘Spine Tingling’ feel of an accelerating-turbo spooling-rush inducing diesel engine.
2. The previous point is rendered ‘Pointless’ if the same ‘Somebody’ has owned/driven/experienced a T-jet or TSI. The ones who have will care less if someday Diesel is offered free with Bisleri water. No matter how good a Turbocharged Diesel engine will be, it will not offer the ‘Spine Tingling’ feel of a high revving Turbocharged Petrol engine.

The bottom line folks is that a Wise person will follow his Mind, but a Petrol-head must always follow his Heart, whichever way it beats !!

So what makes the difference is the turbo, and not the engine. Once turbo-petrols catch up, there wouldn't be any reason why somebody should be looking at diesel engines anymore.

Originally Posted by Mohan Mathew A

Slightly OT

Sorry, the math doesn't add up.

Keeping all your assumptions the same, he doesn't have to drive an additional 44,247 km, he just have to drive 44,247 km to break even.

let me explain

Running cost for 44247 km

For petrol; 44247*6.26=276986

For diesel:44247*4=176988

Difference in cost=99998

i.e with the current running (again keeping all assumptions the same) he would have recovered the additional amount in 2 years and a couple of months.

Since everybody is doing the math, here is my math on why buying a diesel does not make sense for an average buyer. Of course, I am not very good at math, so I am open to being corrected if I got it wrong.
.

[Desi Dybuk]

Originally Posted by blacksport

Not everyone, true, but members of your tribe is too few.

I can't recall a period between 1992 and today where diesel and petrol were priced close to each other. The gap in the past was huge and only started narrowing in the last few years. Would like to know which era you are referring to.


So what makes the difference is the turbo, and not the engine. Once turbo-petrols catch up, there wouldn't be any reason why somebody should be looking at diesel engines anymore.



Since everybody is doing the math, here is my math on why buying a diesel does not make sense for an average buyer. Of course, I am not very good at math, so I am open to being corrected if I got it wrong.
Attachment 1282648.

This also doesn't include the fact that the price differential between Petrol & Diesel is going to reduce even further after the inevitable Diesel deregulation. Don't forget about the maintenance costs of diesel (at least for Hyundais, the normal servicing cost of Diesel is almost double that of Petrol). The calculation would skew even further towards Petrol when the resale cost of Diesels come down when people realise that Diesel isn't VFM anymore.

Good calculation.

[Vik0728]

Originally Posted by blacksport

So what makes the difference is the turbo, and not the engine. Once turbo-petrols catch up, there wouldn't be any reason why somebody should be looking at diesel engines anymore.

Absolutely blacksport, I am not even complaining that without a Turbo, a high revving Petrol engine like I-vtec is no fun.

My point is that not everyone revs their N.A engine to high RPM fearing wear & tear, etc. By this, they may loose out on all the adrenaline rush. But many will use the power band where the TC engine will give that driving fun !!

Please correct me if I am wrong here, but from what I know many of the manufacturers are moving towards downsizing their 'Performance Motors' only to add a Turbocharger, Supercharger or Both. This results in a very similar power delivery like those big motors but at considerably lower weight.

Since everybody is doing the math, here is my math on why buying a diesel does not make sense for an average buyer.

Agree again, but I can bet my bottom buck that if this 'Average Buyer' was to drive a Swift (P) and Swift (D) back to back, he would know where all the Fun was !!

[Desi Dybuk]

Originally Posted by Vik0728

Agree again, but I can bet my bottom buck that if this 'Average Buyer' was to drive a Swift (P) and Swift (D) back to back, he would know where all the Fun was !!

Putting Maruti Swift & Fun in the same sentence is a crime against humanity !

All jokes aside, I doubt the average car driver can discern the relative fun factor of these engines. Most are not like gearheads like us & car is a tool to get them from point A to point B.

[sandeepmohan]

Originally Posted by blacksport

Once turbo-petrols catch up, there wouldn't be any reason why somebody should be looking at diesel engines anymore.

I think all the catching up that is needed, has already been done. I don't think it is possible for a petrol engine to be anywhere as efficient as a diesel.

The most advanced small capacity turbo petrol engine is nowhere as fuel efficient compared to any modern diesel of even a higher capacity. The difference is more evident when you start flooring the gas pedal.

More than the difference in cost of fuel or the vehicle, it is about what performance you can get and as things stand, diesels are right up there with petrol's and in a increasing number of cases, are superior. Reliability of a diesel engine is also out of the way now.

[blacksport]

Originally Posted by sandeepmohan

I think all the catching up that is needed, has already been done. I don't think it is possible for a petrol engine to be anywhere as efficient as a diesel.

Does not matter. My calculation assumes that the FE of petrol is 18kmpl and of petrol is 13kmpl for petrol. So its all taken care of. Even with the higher efficiency, it does not make economic sense to buy a diesel.

[Desi Dybuk]

Originally Posted by blacksport

Does not matter. My calculation assumes that the FE of petrol is 18kmpl and of petrol is 13kmpl for petrol. So its all taken care of. Even with the higher efficiency, it does not make economic sense to buy a diesel.

Not to nitpick, but you probably meant FE of 18kmpl for Diesel & 13kmpl for Petrol.

I think for those who look at data impassively, Diesel does not make sense anymore. However, you know about old habits & their deaths... It'll be a while before the average consumer realises that Diesel only makes sense for those who have very high average running per year.

[Mohan Mathew A]

Originally Posted by blacksport

Since everybody is doing the math, here is my math on why buying a diesel does not make sense for an average buyer. Of course, I am not very good at math, so I am open to being corrected if I got it wrong.
Attachment 1282648.

I think there is a problem with this math too (now don’t hit me on the head with a hammer)

You have INR 842571
In the case of diesel car you use it fully to buy the car
In the case of the petrol car you use INR 713667 to buy the car and the remaining INR 128904 you deposit in a bank. The important thing to note here is that you have used the entire amount (I agree, one is a bank deposit)
After 7 years in the case of the diesel car you get INR 400000 as resale. So your net outgo is 842571-400000=442571
After 7 years in the case of the petrol car you get INR 250000 as resale. You also get INR 257808 from the bank. So your net outgo is 842571- (250000+257808)= 334763
When you add the fuel expenses, for the diesel car your total outgo is 442571+379166.7=821737.7
When you add the fuel expenses, for the petrol car your total outgo is 334763+605769.2=940532.2