Many first time car buyers in the country often wonder about opting for petrol or diesel powered vehicle. It is a well known fact that Diesel cars come with a higher price tag, but given the constant rise in fuel prices and improvement in petrol engine technology have resulted in almost the same running costs. Reportedly, a couple of years ago the owners would take about 2.5 years to recover the premium paid for the diesel variant, whereas now the duration has gone up by almost 6 years to recover the invested premium amount.
As per a report from popular rating agency Crisil, “the price gap between petrol and diesel narrowing sharply since fiscal 2012, the extra money paid to buy a diesel variant no longer makes economic sense.” As per them, this fiscal the petrol-to-diesel price ratio is expected to reach low by about 1.2 times. Taking into consideration that on an average, the Indian car is run for around 10,000 kms in a year, the Crisil report states that, “In FY 2012, when the fuel price differential was at its widest, it took around 2.5 years to recover the premium paid to buy a diesel car, considering the savings made on fuel as well as resale price. Today, it will take nearly six years to recoup the money.”
The report is indicative just for the personal vehicle choice, whereas commercial vehicle would not take so long to enjoy the premium price as the vehicle usage would be higher. The number calculation in terms of economy just does not add-up to private users. In European Union the price premium averages to about 10%, whereas in India the premium goes up by 20 – 25 % than the petrol version.
