Want to buy a Car in India. Petrol or Diesel? Confusion! - Finance

<p>This is the confusion many have when they decide to buy a car in India considering the current price difference between petrol and diesel as well as the price difference between petrol and diesel model of same car make. Based on this let us do a mathematical analysis. For the sake of comparison, i am taking Swift petrol and diesel since this is one of the popular car in India having both versions.</p>

<p>Ex Showroom Price.</p>

<p>Maruti Suzuki Swift VXi- Rs 4,82,000/-ApproxMaruti Suzuki Swift VDi- Rs 5,82,000/-Approx</p>

<p>The difference comes to 1 lakh.</p>

<p>Petrol Price- Rs 69 Approx (Kerala Price)Diesel Price- Rs 44.5 Approx (Kerala Price)</p>

<p>The difference comes to Rs 24.5.</p>

<p>The average mileage of petrol version comes to around 15 kmpl and of diesel version comes to around 20 kmpl. Assume a person use the car for around 8050 kms an year the total petrol expense for 5 year period comes to Rs 2,01,250/- and Diesel comes to Rs 95594/- During calculation, it is assumed that there will be an average annual price hike of Rs 3 for petrol and Rs 1 for diesel. The excess petrol expense comes to Rs 105656/-.</p>

<p>Now Assume that a person buys petrol car for Rs 482000/-.Assume the resale value of both model as 50% at 5th year end. The old petrol car will fetch Rs 241000/- and diesel car will fetch 291000/-. So the net cash outflow for petrol version is (201250+241000)=Rs 4,42,250/-. Now assume he wants to buy a diesel version. I assume that he takes car loan for extra 1 lakh at current rate of 12%. In that case his total interest comes to 32,145/. I have added Rs 6,000 as road tax differential, Rs 10,000/- as insurance premium differential and 7,500 per annum as maintenance charge differential for 5 years. Now let us see the the cash outflow for diesel version (95594+291000+32145+23500)=Rs 4,42,239. The difference between these two figures comes to Rs 11.</p>

<p>Verdict:</p>

<p>This shows that buying a diesel car is cheaper under current scenario, even if the annual usage is 8000 to 9000 kms .</p>

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<p>The above calculations are based on assumption that the car will be used for 5 years.
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