Petrol Vs. Diesel – Which Car Should You Buy?

There is a lot of advice floating around on this topic. When asking someone what car to buy the advice varies from the car brand to type to the fuel it utilizes.  Recently, my husband and I bought a car and we received a lot of tips. Many of our friends chose to buy a diesel car. We chose a car that runs on petrol. Here’s why.

What is the price difference between a petrol and diesel version of any car?
It ranges between Rs.1, 00,000 to Rs.1, 50,000 depending on the car. I live in Bangalore. Here, diesel costs about Rs.58 a liter and petrol costs Rs.80 a liter (approximately). Petrol is more expensive by Rs.22 a liter. A close friend chose to buy a diesel car. Let us say his name is Pete. Pete paid Rs.1, 20,000 extra for his car. Last year Pete drove 15,000 kilometers. Pete’s car gives him about 13 kilometers to a liter of diesel and thus he used 1153.85 liters of diesel.

15,000 kilometers     =   1153.85 liters of diesel.

13 kilometers

                       1153.85 liters  x   Rs.22   =   Rs.25,385

Since diesel is cheaper by Rs.22 a liter, Pete saved Rs.25,385. 

The diesel version of the car cost him  Rs.1,20,000 so it will take Pete almost 5 years(4.72 years to be precise) to break even.

Rs.1, 20,000     =      4.72 years

Rs.25,385

Break-even point is the point of no profit no loss. After 4.7 years, Pete will profit from buying a diesel car

Here is why I bought a car which runs on gasoline. I use the company bus to commute to work. My husband is one of the few lucky ones who can walk to work. It is about a twenty minute walk for him.  We usually drive the car only on weekends. We drive about 100 kilometers a week. This amounts to driving about 5200 kilometers in a year. My car gives me 11 kilometers to a liter of fuel so I will be using 472.7 liters (5200/11) of fuel in a year. 472.7 liters x Rs.22 = Rs.10, 400.

Rs.1, 20,000     =      11.53 years

Rs.10, 400

If I paid Rs.1, 20,000 extra for a diesel car and drive 5200 kilometers in a year, it will take me almost twelve years to break even. In twelve years, there will be significant inflation and I might buy a new car if this one starts giving me trouble. This is the reason I bought a car that runs on petrol.

A lot of people recommended that we buy a diesel car. It certainly is profitable for people who drive a lot. I always wondered what “a lot” means and thus sat down to crunch numbers. For any purchase or financial decision, all of us should make sure that it makes sense for our situation. A “profitable decision” for X may not be a profitable decision for Y

A humble request to all of you – please estimate how much you will be driving and whether it will be profitable to buy a more expensive diesel car. Let us make sure all advice floating around is tailor made for us by studying the numbers.