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Why petrol cars may win race against diesel vehicles

by ET Posted on 07 Jan 201348,948 Views4 Comments

With diesel prices likely to go north coupled with higher price tags of diesel vehicles the market may tip in favour of petrol cars


Maruti Suzuki A-Star


A diesel price hike of Rs 5 in September has seen demand for passenger cars perk up in favour of petrol versions. Going forward, it will decisively tilt the scales in favour of petrol when the proposed hike of Rs10 in diesel will be implemented. 


The industry expects the momentum for petrol cars to gather speed. In 2010-11, the price differential between petrol and diesel stretched to almost Rs 25 a litre forcing many customers to opt for diesel cars.


Since then, analysts say, thanks to a hardsell by auto companies to its dealers, the customer is now more informed about which fuel powered car to choose depending on the usage.


Why petrol small cars are more economical than diesel, if a user doesn't drive for more than 50 kms a day?


According to an ET analysis, assuming a user is driving the vehicle for a minimum of 50 kilometres a day, the time taken to recover the premium paid (the extra money paid for the diesel car) for a diesel car like Chevrolet Beat as against its petrol-fuelled counterpart is two years and five months or 44,000 kilometres.


The period to recover the premium paid for a diesel car will extend to three years and two months or 58,000 kilometres, if the proposed diesel price hike is implemented.


In case of best sellers such as Maruti Suzuki Swift, which comes with a premium of Rs 1.08 lakh on the diesel top-end variant, the time taken to recover will increase from three years seven months or 66,000 kilometers currently to four years 11 months or 89,000 kilometers.


The diesel cars already command a premium of 15-23% over its petrol variants (Rs 75,000 to Rs 1.25 lakh) and are twice as expensive to maintain, service and repair. However, the diesel cars do offer 15-20% more mileage than petrol cars and are better in terms of emission control.


Many of the companies are now making the case for a diesel car if the person uses the car for more than 50 kilometers a day. Considering that the lifecycle of a car is only 4-5 years, a customer may not benefit much by owning a diesel car, if he or she does not drive long distances.


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