2013 Petrol Vs Diesel Calculation Petrol car, Yearly usage 5000 Km Petrol Price: Rs.71.28, Diesel Price Rs.

51.40

PetrolSwiftVXI Expense 5000Km/Year Vehicle cost 5.8Lakhs Interest@10% = 58000 5000km /year petrol exp@rs70,18km/L=20000 Insurance =13000 Maintenance =2500 Interest for FD 70000s@10%(6.5L -5.75L) =7000 Total yearly expenses =86000 Petrol Car Monthly Exp 7166.66667 Note:Rs 75000 can be put in FD Diesel ritzVDi Expense 5000km/year Vehicle cost 6.5Lakhs Interest@10%= 65000 5000k/m /year Diesel exp@rs45,20km/L= 11250 Insurance= 13600 Maintenance= 5000 Total Yearly Expense= 94850 == Diesel Car Monthly Exp 7904.16667== Note: Diesel car requires Rs 8850 more than petrol car whose yearly usage is around 5000 KM. Resale value 50000 more for Vdi to VXI SCENERIO TWO Petrol Car Expense 10000Km/Year Vehicle cost 5.8Lakhs Interest@10% = 58000 10000k/m /year petrol exp@rs70,18km/L =40000 Insurance =13000

Maintanace =2500 Interest for FD 70000s@10%(6.5L -5.75L) =7500 Total =106000 Monthly Exp Petrol car =8833.33333 Rs 75000 in FD Diesel ritzVDi Expense 10000km/year Vehicle cost 6.5Lakhs Interest@10% =65000 5000k/m /year Diesel exp@rs45,20km/L =22500 Insurance =13600 Maintenance =5000 Total =106100 Monthly Exp Diesel car =8841.66667 Resale value 50000 more for Vdi to VXI Note: Up to 10000 km yearly usage diesel car does not give any financial benefit to the car buyers.

There is always lot of debate and confusion over Petrol car and Diesel car. This is a complete review to clarify all doubts about a petrol and diesel cars in economic aspects. Now a days 58% of the passenger cars in all segments are Diesel variant. ...People blindly go behind with out considering break even point of diesel car .Most of the persons simply calculate the kilometer expenses only.Diesel cars will have always high mileage & better resale value. Its running cost will be almost half of a petrol car. Roughly a petrol car running cost is Rs.5/KM where as Diesel car running cost is Rs.2.5/Km. This only simple arithmetic,There is lot more economics which is not at all considered by a common man is involved. I am trying to find out the Interesting calculations of a Petrol/Diesel car. A Diesel car will give viable profit only your usage is high. A person with annual usage of 5000 km to 6000 Km can very well buy PETROL CAR. He need not worry about the petrol price hike and even it touches Rs.100/- also he will be benefited .Keeping in mind that the difference of petrol and diesel is maintained almost 25-35% for last two decades. After lot of calculation and detailed analysis I understood that person with average monthly usage of 500 KM can very well buy a petrol car and it shall be benefit for him even if the petrol price touch century( keeping in mind the that the difference of petrol and diesel is always maintained, it may even narrow in future).

Objective: To determine the pricing strategy for an automobile company in a state where diesel is expensive then petrol. Statistics: Diesel Market 58% Better Mileage Better Resale value Cost of running Diesel Car 2.5 Rs per Km Cost of running Petrol Car 5 Rs per Km

Assumptions: Population of that city Economic history of city

Analysis: From the calculations in table 1, we can infer that a rational customer will not opt for diesel variant at given price tag. The company will have to reduce the price gap. We understand that higher fuel prices are associated with consumers choosing a higher level of fuel economy. This will affect the equilibrium sales. Globally, a $1 increase in gasoline price is associated with an average price decrease of $362 for the lowest fuel economy vehicles.

On the other hand, a $1 increase in gasoline prices is, on average, associated with a $295 vehicle price increase for the highest fuel economy vehicles. Our results indicate that manufacturers and dealers respond to the demand change by adjusting both prices and quantities, but with bigger percentage changes in quantities than in prices. [1] Thus, a producer with good line up of compact and mid-size cars may be helped by the given scenario.

Since manufacturers and dealers are equally exposed to changes in sales, this suggests that manufacturers are to some extent insulating their dealers from the effect of gasoline price increases by some means such as increasing direct- to-dealer rebates or dealer holdback.

SOURCES Who is Exposed to Gas Prices? How Gasoline Prices A_ect Automobile Manufacturers and Dealerships by Meghan R.
Busse,Northwestern University and NBER; Christopher R. Knittel, MIT Sloan and NBER; Florian Zettelmeyer Northwestern University and NBER; November 2012