With the recent price hikes of the heavy fuel, the difference between petrol and diesel is minimal. Indeed in Delhi, diesel is pricier. Does it make sense to buy a diesel car anymore?

Hyundai launched their updated Tuscon Sports Utility Vehicle this week. We would have done a test drive of that but because the carmaker gets their cars registered in Chennai and that southern city has gone back into a complete lockdown, it might be a week or so before we get to experience the new eight-speed automatic gearbox on the Tucson. That eight-speed gearbox is mated to Hyundai India’s new introduction, the ‘Nu’ 2.0 litre diesel engine with 185 horsepower, and this made me wonder if it makes sense to buy a diesel car anymore?

The reason I’m wondering is quite simple as diesel now costs more than petrol in Delhi. In most of the states, the price differential between petrol and diesel had come down under Rs 5 per litre when prices shot up last month. This gap has increased once again, opening up to Rs 8 per litre in Mumbai. Now, given that diesel vehicles are more efficient than petrol ones, but cost, on average across segments, at least Rs 1,00,000 more ex-showroom price at a similar specification level. You could argue that diesel makes more sense.

However, the problem is as we have learnt, prices of fuels are not steady, which means the calculations that you make today to justify a diesel purchase over a petrol car is complicated. If you bought a diesel car in Delhi last year because you assumed diesel prices would stay far below those of petrol, well, your maths have gone awry. All thanks to the Arvind Kejriwal government’s decision to hike excise duties on diesel. It would be dangerous to make the assumption that other states will not follow suit on diesel. One reason is that in many major cities, local public transport is almost entirely powered on CNG as is local goods transport. The argument that diesel is the fuel of transport is a bit harder to make now as even the Railways have electrified most of their major freight lines.

For the purpose of my argument, let us look at current prices. I am currently driving a Hyundai Elantra as my long term vehicle, and since December 2019, I have driven over 6,000 kilometers, maybe a bit less than I would have in normal times. But you don’t need me to tell you about the times we live in. This car, with Hyundai’s two-litre ‘Nu’ petrol engine has given me an average of 11.5 kilometers a litre. Hyundai has fitted the 1.5 litre U2 CRDi engine, the same as on the Creta and Verna and on this car as well. In city conditions, that engine delivers around 16 to 17 kilometers a litre (let us take 16.5 kilometers as an average). Once things return to normal and if you work and live in Delhi without crossing the borders, averaging around a 1,000 kilometers a month is normal.

At current fuel prices, this would mean I spend around Rs 7,000 a month on petrol and Rs 5,000 on diesel. Over the 60-month lifespan of the car, this Rs 2,000 per month saving would work out to Rs 1.2 lakh which just covers the Rs 1.1 lakh ex-showroom price difference between the engines. But on-road, it doesn’t cover the difference. Now, one could argue that the diesel vehicle would have slightly higher residual value. But keep in mind that the Supreme Court has mandated that diesel vehicles can only be run in the entire NCR for ten years, which kills residual values for diesels, whereas petrol cars have a 15-year lifespan.

Now, the math changes dramatically if you live in Gurugram and work in Noida or vice versa. You might easily cover 500 kilometers a week for 2,000 kilometers. Diesel is still Rs 5 per litre cheaper in Haryana and at that milage, always filling in Gurugram you would spend Rs 9,000 a month on diesel and Rs 13,700 a month on petrol. A huge Rs 4,700 difference, a massive Rs 2.8 lakh differential over 60 months, which might even cover the lower residual value you would get for a diesel vehicle in the NCR when you sell it as Gurugram registered diesel cars also have a ten-year life span.

But there is a catch there as well. The math has been done on the basis of today’s fuel prices. We have learnt the hard way that these prices are not static. They can shoot up whenever state or central governments need additional revenues. It is quite likely that a global economic recovery following the virus might see fuel prices increase again. And if air pollution increases in cities outside the NCR, the Supreme Court might extend their 10-year rule regarding diesels, even far cleaner BS6 diesels to other cities.

During the Tucson launch, Hyundai India’s Tarun Garg revealed that on the second-generation Creta, over 56 per cent of orders and deliveries were for diesels. This might seem impressive, but my takeaway there was that 44 per cent of sales were for petrol. In the first few months of the first-generation Creta, six years ago, almost 85 per cent of sales were for diesels. However, now a bulk of the diesel vehicle demand is down in the southern states and Maharashtra. In fact, in Maharashtra, petrol and not diesel is taxed excessively, so even with the traffic jams and lower distances in a city like Mumbai, diesel makes sense.

There is also an irony about diesel. From a purely carbon point of view, diesel-powered vehicles are cleaner than petrol, more bang for the buck. But diesel, even BS6 diesels, do emit more Sulphur, NOx and particulates than petrol. This will be mitigated by the forthcoming BS6b norms in a couple of years, but those involve a SCR — Selective Catalytic Reduction system — much more expensive that the particulate filter systems used by some manufacturers today. An SCR based 1.5 litre diesel might cost Rs 2.5 lakh more than an equivalent petrol. In addition, as 48 volt battery systems become the norm, I would expect more and more hybrids to make it to India. While these hybrids might have only a 10-kilometre pure electric range, they would make petrol engines far more efficient. The Swift hybrid sold in Japan has a claimed urban fuel economy of upwards of 30 kilometres a litre, and the additional power from the battery would make it more fun to drive as well.

So it is not a simple answer. If you drive a lot, diesel still makes sense, albeit barely, if you live in the NCR. In Maharashtra, diesel is the king for the same reason it loses out in Delhi. Down in Bengaluru, Chennai and Hyderabad, the cleaner air (for now) has led to fewer strictures against diesel, although the higher prices of BS6b diesels might kill that as well. And that is all on the basis of today’s prices, who knows about tomorrow.