Diesel or petrol, what's driving your choice in buying a car?

Friday’s announcement of Rs2/litre cut in petrol prices appears to have aggravated the indecision of first-time car buyers. Do they still go out and buy that diesel car or settle for petrol?

“When I had almost decided to go for a diesel car, the prices of diesel started going up. And now, petrol prices are coming down. I am not sure what I should go for,” says Andheri-resident Ashutosh who commutes to Nariman Point for work every day. That would be a good 27km by road, one way.

The past couple of years have seen the car market getting skewed in favour of diesel cars, mainly due to the fact that diesel prices are way less than those of petrol.

According to a November 2012 report by Jefferies, as much as 56% of the new passenger vehicles sold in the country were diesel, up from 36% two years ago.

What has changed since then? For one, diesel prices have started going up by 45-50 paise a month since the government allowed oil companies to hike prices, in small instalments as it were.

Prices of petrol, on the other hand, are linked to international prices and — theoretically, at least — fluctuate accordingly.

Take the latest reduction, for instance.

All the same, the math for a car buyer hasn’t changed much. Sample this: The average price difference between a petrol and a diesel variant of a car is almost Rs1.5 lakh. The fuel efficiency of petrol and diesel cars are around 14 km/litre and 18-19 km/litre, respectively.

At this rate, if you are driving a diesel car for 50 km a day, you can save around Rs115-120 on a daily basis – or around Rs42,000 a year – versus petrol. You’d need around three-and-a-half years to recover the extra amount.

In case your daily driving requirement is 75km a day, you will recover the difference in 19 months.

“We only advise customers to go for a diesel car, when his driving requirement is more than 100km a day,” said a Mumbai-based Hyundai dealer. At that level, one can recover the difference in a year or so. Then take the resale value.

Even here, diesel cars enjoy a premium – around Rs25,000-30,000 for a three-year old car – over petrol.

But of course, diesel cars are also more expensive to maintain, according to industry sources.

“The more diesel gets expensive, the longer you will take to enjoy the benefit of a diesel car,” said an analyst who did not wish to be quoted.

The tipping point, though, may be some way off.

@Yugac