Fuel formula

Petrol or diesel — which gives more mileage for your money and how? t2oS does the math

By Abhijit Mitra
  • Published 10.06.18
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For the last few weeks, the biggest worry for motorists has been the rising price of fuel. In Calcutta, for the first time ever, petrol has gone past Rs 80 per litre and is now hovering around Rs 81. The price of diesel is also at an all-time high of Rs 71.86 per litre. And that’s pushing up the cost of running a car quite sharply, leaving users wondering how they can cut back on costs.

This surge in prices is affecting the car market in other ways as well. Alongside the rise, there is a thinning of the price difference per litre of the two dominant fuels. Look at the prices announced on December 1, 2011. Petrol sold for Rs 70.03 per litre in Calcutta, while diesel was at Rs 43.74. That’s a substantial difference of Rs 26.21 per litre. Compare that with the current prices and the gap narrows down to a modest Rs 9.20.

The numbers become even more telling when one looks at the difference in terms of how much cheaper diesel was compared with petrol. While currently diesel is 11.34 per cent cheaper than petrol, back in 2011 that gap was 37.54 per cent. Add to the fact that diesel cars are typically more fuel efficient per litre, and the reason for the swing towards diesel is fairly easy to understand. 

This fact hasn’t been lost on car buyers either. Much of the shift towards diesel car purchases — to keep running costs low — that happened as the petrol-diesel price gap widened has been reversed as the difference has narrowed. For some models the share of diesel variants in total sales had gone up to as much as 50 per cent. Now they have dropped back to the 25 per cent range or lower. 

Therefore, there are two questions to be answered. First, when should one buy a petrol car and when a diesel? Second, if one already owns a diesel car, considering the fuel price trends, does it make sense to switch to a petrol? 

WHAT TO BUY

This question is best answered with an example of an entry-level sedan. Say the fuel efficiency of the petrol and diesel versions with manual gearshift is about 19kmpl for petrol and 26kmpl for diesel. The fuel cost per kilometre in Calcutta at current prices works out to Rs 4.26 for the petrol and Rs 2.76 for the diesel. So, the diesel car would be Rs 1.50 cheaper to run per kilometre taking only the cost of fuel. 

For similar levels of trim, a diesel car in this segment is about Rs 1 lakh more expensive than a petrol. While earlier diesels needed to be serviced every six months or every 5,000km, for most diesels nowadays the service interval is the same as for the petrol — that is 1,000km, 5,000km, 10,000km, and thereafter in intervals of 10,000 km or one year, whichever is earlier. While diesels are still about 25 per cent more expensive to service, with the service interval now the same as that for petrol cars, that difference in ownership cost isn’t that significant any longer.

Assuming a five-year ownership period, diesels are expected to cost about Rs 5,000 to Rs 10,000 more to service than a petrol. Add that to the higher price and the savings on fuel would have to make up for about Rs 1.10 lakh for the cost of ownership to equalise. At current fuel prices, that would mean that costs would equalise after the cars have been driven for about 73,000km. It is only when the diesel car is driven for a longer distance that the overall cost will it out cheaper than a comparable petrol car.

The key point to consider then is: Do you expect to run the car for that distance?

An average person would run a car for 10,000km a year; it would take more than seven years to rack up that mileage. With most owners swapping cars after about five years, chances are that in terms of costs one would be better off driving a petrol. However, if you are one of those expecting to run your car a lot, a diesel could still work out cheaper for you. 

For the purposes of this calculation, notional fuel efficiency figures that are broadly around what cars in this segment are being certified for have been used. Those looking at particular models need to re-do the calculation with the model-specific figures. 

Also, in daily use, one typically doesn’t achieve the certified fuel efficiency and it would be safe to reduce it by 15 to 20 per cent to account for congested roads, slow traffic and use of air-conditioners, among other factors.

If one accounts for those, the cost equating point in the above calculation comes down to 57,000km from 73,000km, which is quite a big difference. So one needs to run one’s numbers before taking the call.
 

IN THE LONG RUN

With diesels losing much of the running cost advantage, does it make sense for you to swap out your older diesel for a new petrol? Even leaving out the current spurt in fuel prices, the broad trend over the last seven years shows that, compared with petrol, diesel is not as cheap to buy as it used to be any more. And it is unlikely to regain that price advantage in the near future. That means that you might need to hold on to the car longer than you expected to if you have to get a financial advantage.

But the wear on the car, and, consequently, the maintenance costs, won’t depend on the price of fuel. Plus, in Calcutta you also need to add the cost of renewing your registration after the first five years. Besides, selling the car after, say, three years is likely to fetch you a better price than it would after five. 

All told, the figures could add up to make the case for a petrol a pretty strong one. It’s probably time to sit down with your calculator and crunch the numbers.