Why buying a diesel car makes no sense any more

There are many in India who preferred to buy diesel cars to save on fuel costs. Traditionally, diesel prices were always lower than petrol. However, it no longer makes sense to do so.

Here are 5 pointers that explain the development:
1. Price correction: International oil prices are down 14% since June 2014. It no longer makes sense to buy a diesel car. The difference in the price of diesel and petrol is narrowing rapidly.  At the same time, the Indian government has raised prices of diesel sold to us. As a result, petrol prices are falling and diesel prices are rising. The gap between a litre of petrol and diesel is less than 10 rupees now.
2. Recovery much longer: In 2011-12, when the price difference between petrol and diesel was the highest, it took only two and a half years to recover the high price or the premium you pay for a diesel car. However, today, it would take nearly 6 years for you to recover the money, according to CRISIL, the credit rating agency. This takes into account commute of 10,000 km annually.

3. Comparison: CRISIL compared Maruti Swift, Dzire, Honda Mobilo and Skoda Superb models for the difference in performance of diesel and petrol variants. The price difference between petrol and diesel variants of these cars ranges from Rs 1 lakh to Rs 3 lakh for Skoda Superb. While it would take over 5 years for Maruti Swift diesel version to recover the difference, it would take more than 9 years for Skoda Diesel variant to recover the premium paid.

4. Diesel car prices may fall: CRISIL expects manufacturers to slowly cut prices of diesel vehicles considering converging fuel prices. Every third small or medium sized car is a diesel car. However, diesel cars account for three-fourth or 75% of the utility vehicles sold, according to CRISIL. A section of analysts believe prices of diesel cars in the second-hand market would fall too. This means if you own a diesel car, the resale value of that car would drop too.
5. Commercial vehicles: The impact would be limited on commercial vehicles. They clock longer distances and usage of fuel is very high. Even a small difference would continue to benefit trucks and commercial vehicle users.