Saturday, 2 April 2011

Buying a car? Think small!

Whether it's affordability or fuel-efficiency, small cars score over bigger vehicles.

Buying a car is perhaps the first big ‘buy' for most of us. And to make a well-informed decision, we need to work out the logistics of car ownership in its entirety, and not just limit it to the cost of the car. Apart from the EMIs (equated monthly instalments) on your car loan, there's also the fuel factor to be considered. A bad choice here can burn a hole in your purses, given the wild meandering of oil prices.

Over and above this, there are cost implications even when you accessorise your car. With a wide and attractive range of car accessories such as alloy wheels and new-age music systems, there are many ways to keep spending on your machine! Then there's also maintenance, tinkering, repairs and annual insurance that add up the cost. And more often than not, bigger the car, bigger is the outgo.
One size fits all

So, what can you do if your budget is tight but aspirations aren't? Buy a small car. Measuring up to 4 meters in length, the small car scores over most of its bigger counterparts on affordability, fuel efficiency and maintenance costs. And, with India becoming a global manufacturing and export hub for small cars, the options seem ever expanding. Prices too are becoming more and more competitive, thanks to frugal engineering.

For instance, Bajaj only recently said that it would showcase the prototype of its ‘ultra low cost car' to its partner Renault. Hyundai is making the HA, a car that may be priced below the Santro. Nissan will be coming out with two cars priced cheaper than the Micra's. Toyota's small car, the Etios Liva will be launched in shortly. Even M&M is turning its Xylo into a mini Xylo to tap the small car users' segment.
Lighter on the wallet

A small car makes for a good choice, especially if it's your first car. A lower EMI on your car loan will do a world of good when you are in the early stages of your career, as your affordability might be lower in the beginning. Besides, the chances that you might still be repaying your education loan and could be buying a new home in the near future are high. Also, EMIs tend to increase based on rate hikes by banks. For every additional lakh of rupees that you borrow, the dent on your wallet will be deeper. All these mean that a small car is the best bet for first time buyers.

Starting right from Rs 1.5 lakh for the standard Nano, to about Rs 9 lakh for the high-end version of the Honda Jazz, small cars are available aplenty to suit every pocket. Today the Ford Figo and the Chevy Beat that cost between Rs 3.8 to 5.8 lakh on road are considered to offer the best value for money. But that doesn't warrant them being your choice. The sub-division of the compact car segment into entry (e.g. Alto), mid (e.g. Estilo) and premium compact (e.g. U-VA, Polo, Swift) in recent years would help you streamline your purchase based on what you need the car for - as a basic means of transport, as an upgrade or as a second car.
Fuel- efficiency

Owning a gas guzzler is just not economical, especially when oil prices never seem to tire on their upward journey! Small cars score especially well on this front. For example, the recently introduced Alto K10 gives a mileage of about 14 km per litre in the city. In contrast, the newly-launched big car Kizashi from Maruti gives only 7.9 (automatic gear). Similarly, the Chevrolet Spark 1.0 is said to give a mileage of 12.3 km per litre while the Optra Magnum gives 9.5. Bajaj's car tops them all with a promise of 30 km to a litre!

Remember the runaway success of the Swift diesel? You can also buy diesel cars, considering the technological progress of the diesel engine and the fact that diesel is less expensive and gives more mileage. However, keep in mind that a diesel car's initial purchase price is higher. Small cars, such as the Figo, i20, Ritz, Polo and Micra have diesel options. They also have an edge over some sedan diesel counterparts in terms of mileage.
Alternate fuel choices

Diesel may be cheaper than petrol but it leaves your green footprint a bit tarnished. Here again, more small cars come more with alternate fuel options – CNG, LNG and electric – than big ones. While the Alto, Estilo, Wagon R, Santro and i10 have CNG options, the Spark, Beat, Indica EV2 and Wagon R Duo are among the small cars that have LPG options. There's also the Reva, India's only electric car, to consider, especially if you are single, have limited use for the care or if it's your second car.

But if you are willing to wait it out, a new four-seater model will be out from the Reva stable shortly. While the higher price of these alternatives may be a dampener, cheaper (LPG/CNG) or near zero running costs (Reva) make up for it. You can also buy a slightly used car for a lower price.

The government's focus on hybrid and electric vehicles would definitely help bring down the prices of such cars. Going by this, you can expect India-launches of the Nano hybrid and electric and the i10 electric, which are currently being considered for Europe, in the not-so-distant future.
Other advantages

Small cars are a big advantage and help you manoeuvre your way out of roads chock-a-block with traffic. It also makes finding a suitable parking space in highly congested shopping areas, theatres and restaurants easy.

It's even convenient in terms of insurance and maintenance costs. The resale value may also be better for small cars.

(Source from: businessline)

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