Does It Make Sense to Buy a Diesel Car Anymore?

The price difference between a litre of petrol and diesel has come down to just over Rs 8 a litre.

Fuel prices are on the rise and diesel is rising faster than petrol. Diesel now costs Rs 67.86 a litre in Delhi, while petrol costs Rs 76.61 a litre. The price difference between the fuels, which was once as high at Rs 21 a litre before diesel was also deregulated, is now down to just a little over Rs 8 a litre.

Diesel is also more expensive to produce right now, but retail prices of diesel are lower than petrol, because taxes on diesel are still on the lower side. Total taxes and duties on a litre of petrol are over 108 percent, while it’s about 78 percent on diesel.

Given the rising prices and the narrow fuel price gap, and given that diesel cars come with a more expensive price tag, does it still make sense to buy a diesel car?

Let’s compare the two — using the example of a Maruti Swift petrol and a Maruti Swift diesel variant.

Running Cost of Petrol vs Diesel

The topmost variant of the Maruti Swift petrol costs Rs 7.29 lakh ex-showroom in Delhi, and if you include road tax and insurance it costs Rs 8,22,000 on-road. And the registration is valid for a period of 15 years, which means it will depreciate slower than a diesel car in Delhi, and have a relatively higher resale value after seven years compared to a diesel model.

If the driver uses the car for 1,500 km a month, he will end up spending about Rs 5,223, going by the manufacturer’s claimed fuel efficiency. However, in reality it will likely be about 50 percent higher.

The topmost diesel variant of the Maruti Swift costs Rs 8.29 lakh ex-showroom in Delhi, and the on-road price after insurance and road tax is about Rs 9.47 lakh. However, a diesel car can be registered only for 10 years in Delhi now, which means it will lose at least half its value in just five years.

However, diesel is far more fuel efficient. If the car is used for 1,500 km a month giving the manufacturer’s claimed mileage of 28 kmpl, a user will end up spending Rs 3,635 a month.

Given that the petrol variant costs Rs 1.25 lakh less than the diesel variant, the savings can provide fuel for the petrol car for at least 24 months at current fuel prices. And, at the end of 10 years the petrol car will still have better resale value as it can be used legally within Delhi at least for another five years, while the diesel car will have to either be scrapped or sold to a few select cities in north India, where it can be re-registered.

So, is it still worth buying a diesel car in Delhi?

No, it isn’t. In fact, the trends already show that three out of every four new cars sold in Delhi are petrol now, completely reversing the trend from two years ago.

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