COST EFFECTIVENESS OF VEHICLE OPERATIONS MANAGEMENT

PRESENTED BYROLL NO 83 85 86 92 101 117 NAME Romil Ved Prasad Dalvi Jay Shah Darshit Ajmera Shiwang Ghatge Dhrumin Patel

Market Share:
The share of petrol cars, which constituted 81% of the overall market in FY08, has been slipping consistently year-on-year due to the introduction of quality diesel hatchbacks and sedans in the market. The drop, however, has been dramatic in the past couple of years, with petrol prices getting deregulated and diesel prices still controlled. The price gap between petrol and diesel fuel which was around Rs 9.80 in May 2010 widened to Rs 25 in a short span of a year. This resulted in a major shift in demand for diesel cars. The share of petrol cars, which stood at 75% in FY10, slipped to 69% in FY11 and further to 58% at the end of FY12. It went further down to 47% in July 2012 before it gradually recovered. The share of petrol cars has seen a gradual increase month-onmonth to 54% by October of 2012, before closing out the month of November at 53%.

80% 70% 60% 50% 40% 31% 30% 20% 10% 0% FY 2011 FY 2012 69%

53%

Petrol

47% Petrol Diesel

Petrol Diesel

Diesel

Economics Work out

Mileage of XYZ Diesel = 20 kmpl Mileage of XYZ Petrol = 15 kmpl Monthly driving distance = 1000 km XYZ Petrol Price Mileage Monthly Consumption Monthly cost for fuel (INR) Fuel Cost after 1 year Fuel Cost After 2 years Fuel Cost After 3 years Fuel Cost After 4 years INR 6,00,000 15 kmpl 67 liters 67 x 75 = 5025 12 x 5025 = 60,300 24 x 5025 = 1,20,600 36 x 5025 = 1,80,900 48 x 5025 =2,41,200 XYZ Diesel INR 7,00,000 20 kmpl 50 liters 50 x 56 = 2800 12 x 2800 = 33,600 24 x 2800 = 67,200 36 x 2800 = 1,00,800 48 x 2800 = 1,34,400

At the end of the 4th year the money you spent for the Diesel will be around INR 1,35,000. On the other hand the money you spent on the Petrol will be around INR 2,41,000. Profit on Diesel model = 2,41,000 1,35,000 = 1,06,000 This profit on Diesel model is nearly equal to the extra cost you paid at the time of buying it. i.e., Price (XYZ Diesel) Price (XYZ Petrol) = INR 1,00,000, Which will be recovered after the 4 years in terms of the fuel costs. So the BEP will be attained at the end of 4 years.

Mileage of XYZ Diesel = 20 kmpl Mileage of XYZ Petrol = 15 kmpl Monthly driving distance = 1500 km XYZ Petrol Price Mileage Monthly Consumption Monthly cost for fuel (INR) Fuel Cost after 1 year Fuel Cost After 2 years Fuel Cost After 3 years INR 6,00,000 15 kmpl 100 liters 100 x 75 = 7500 12 x 7500 = 90,000 24 x 7500 = 1,80,000 36 x 7500 = 2,70,000 XYZ Diesel INR 7,00,000 20 kmpl 75 liters 75 x 56 = 4200 12 x 4200 = 50,400 24 x 4200 = 1,00,800 36 x 4200 = 1,51,200

At the end of the 3rd year the money you spent for the Diesel will be around INR 1,51,000. On the other hand the money you spent on the Petrol will be around INR 2,70,000. Profit on Diesel model = 2,70,000 1,51,000 = 1,19,000 This profit on Diesel model is nearly equal to the extra cost you paid at the time of buying it. i.e., Price (XYZ Diesel) Price (XYZ Petrol) = INR 1,00,000, Which will be recovered after the 4 years in terms of the fuel costs. So the BEP will be attained at the end of 3 years.

Mileage of XYZ Diesel = 20 kmpl Mileage of XYZ Petrol = 15 kmpl Monthly driving distance = 2000 km XYZ Petrol Price Mileage Monthly Consumption Monthly cost for fuel (INR) Fuel Cost after 1 year Fuel Cost After 2 years Fuel Cost After 3 years INR 6,00,000 15 kmpl 134 liters 134 x 75 = 10050 12 x 10050 = 1,20,600 24 x 10050 = 2,41,200 36 x 10050 = 3,61,800 XYZ Diesel INR 7,00,000 20 kmpl 100 liters 100 x 56 = 5600 12 x 5600 = 67,200 24 x 5600 = 1,34,400 36 x 5600 = 2,01,600

At the end of the 2nd year the money you spent for the Diesel will be around INR 1,34,000. On the other hand the money you spent on the Petrol will be around INR 2,41,000. Profit on Diesel model = 2,41,000 1,34,000 = 1,07,000 This profit on Diesel model is nearly equal to the extra cost you paid at the time of buying it. i.e., Price (XYZ Diesel) Price (XYZ Petrol) = INR 1,00,000, Which will be recovered after the 4 years in terms of the fuel costs. So the BEP will be attained at the end of 2 years.

Factors to be considered while selecting a Petrol/Diesel Car

Petrol and diesel fuel prices
Petrol and Diesel prices need to be taken into consideration before choosing the variant, higher the difference shorter is the BEP period between both he variants.

Residual values of petrol and diesel cars

Diesel cars generally retain their value better than petrol versions. Theyre currently in high demand, thanks to people looking for cars with better fuel economy and lower car tax rates. However, the 2012 Which? Car Survey shows, on the whole, that dieselpowered cars are still slightly less reliable than petrol ones. And while routine maintenance costs are similar for petrol and diesel, it is potentially more expensive to repair a diesel if anything serious goes wrong. In particular, diesel engines use particulate filters, which can get clogged (especially if only used for short journeys), and the cost of replacement can stretch into thousands of pounds.

Car tax, insurance and servicing costs

Diesel engines are inherently more efficient than their petrol opposites, so the CO2 levels are usually lower, resulting in correspondingly lower car tax liability. The difference in servicing costs, however, is negligible. The price of insurance can vary by model and can favour either option, so check before you buy. Car tax and insurance should be factored into your estimations, but the difference will be small compared the likely fuel savings.

Petrol vs diesel other factors to consider

Conventional wisdom says that petrol models tend to be faster, smoother and quieter than their diesel counterparts. However, diesel cars have become more refined, as carmakers have developed ways to mask the trademark signs - to the point where you may even struggle to tell the difference in some upmarket models. Often, the visible give away is the rev counter, which will have a much lower rev limit than one for a Petrol car. Diesel engines also offer increased torque (pulling power) from low revs, which is especially useful when towing or overtaking.

Diesel cars are more efficient, and so use less fuel for a given mileage, potentially causing less damage to the environment (especially if fitted with a diesel particulate filter to trap the nasty soot-like emissions many associate with diesels).

Analyzing the trend

Gap is bridging between petrol and Diesel Fuel Prices. Chevrolets Beat had a Diesel Petrol Ratio of 85:15 Last year, which is change to 70:30 this year. Tata Motors Diesel sales fell. Any Customer Looks for Payback Period of about 4 Years. Purchasing Diesel Car was attractive when there was a huge price Gulf between fuel prices. People Change car now every 4-5 Years. 30 % increase in 4 months in Mahindra Petrol Cars. With the nearing of difference between prices of both the fuels the market is expected to be more balanced.

COST EFFECTIVENESS OF VEHICLE OPERATIONS MANAGEMENT

PRESENTED BYROLL NO 85 101 117 86 92 83 NAME Prasad Dalvi Shiwang Ghatge Dhrumin Patel Jay Shah Darshit Ajmera Romil Ved