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Buy Small, Save Big

Choosing a smaller car in any price category is a great way to save money with many great options available
Auto Bild India        Print Edition: September 2013
Buy Small, Save Big

In difficult times like now, with a slow market, prices of fuel rising and inflation diminishing the value of your earnings, it is a prudent financial decision to buy a smaller car. High interest rates and EMIs on loans are just additional factors.

However, buying a 'smaller' car is no longer a big compromise with great options available in any price segment. Most manufacturers offer innovative features and smart options on even relatively cheaper models, including hatchbacks.

So, you could be losing money when buying a bigger, more expensive car when a smaller, cheaper choice is often the better option.

The calculations are simple. It is a combination of how much you would save on fuel, monthly instalments on a car loan and insurance if you move down a price segment.

The savings on fuel is for three years of ownership with 36,000 km run (1,000 km per month). The calculations are for three years as most owners sell their cars within three or four years of ownership.

The prices of petrol and diesel used for the calculation are Rs 65 and Rs 51, respectively. It will only increase in the next three years.

The interest rate considered on the car loan is 11%, while a mean average of insurance quotes was taken as there are as many quotes as there are insurers.

The figures have been rounded off for ease of calculation. A petrol car from a higher segment has been compared with a diesel vehicle in the lower one to show you just how much you save in the long run.

HATCHBACK: MARUTI WAGONR VXI VS MARUTI RITZ VXI

It's well known that the WagonR sells strong for Maruti, and not without reason. It's inexpensive, has decent cabin space and running costs are low.

Here we've pitted it against its boxy sibling, the Ritz, which was was launched in mid-2009. On paper, the price difference is a marginal Rs 60,000 vis-a-vis the same specifications. This translates into an additional monthly installment of about Rs 2,000 for a three-year loan, an easy amount for most.

However, in three years when you renew your insurance, you will have to pay about Rs 12,000 extra for the Ritz.

Since both cars run efficient petrol engines, both have similar fuel economy figures-on the highway as well as in the city. There is very little to choose between the two on this count.

But, the WagonR has an edge over the bigger and slightly costlier Ritz. It has a more useable boot. Though the WagonR's 180-litre boot is less spacious than the Ritz's 236-litre one, the former has a better design for transporting luggage. It would do for almost all situations.

Being manufactured by Maruti, the resale value of both cars is strong. In fact, the WagonR retains value better than most rivals, including the likes of the Hyundai Santro and the Chevrolet Beat.

Both cars also come in higher variants. The Ritz's ZXi version has features such as twin airbags and ABS along with stereo controls on the steering wheel.

The WagonR does not have a ZXi version, but it does provide driver side airbag and ABS as options, but you still don't get steering wheel mounted audio controls.

OUR TAKE
The WagonR does 90% of what the Ritz can at around 70% of the costs. This makes a great case for choosing the latter.


ENTRY-LEVEL SEDANS: HONDA CITY S MT VS HONDA AMAZE S DIESEL

The price difference between the petrol-powered Honda City and the diesel-powered Amaze is Rs 1.8 lakh. Yet, the features on offer are almost identical. But, the Amaze has a 400-litre boot compared with the City's 502 litres. Of course, 400 litres is practically all the space you need.

A car in this price range would need a very good engine and the Amaze's 1.5-litre i-DTEC diesel engine is one of the most fuel-efficient engines available. The Amaze is guaranteed to deliver stellar economy over three years.

Now consider the monthly instalments on a three-year loan. The difference in EMIs would be about Rs 5,000 (or a little less than what you would pay as monthly instalment for a Maruti Alto).

Also, if you invest this amount in a mutual fund's SIP, or systematic investment plan, which earns about 11% returns over the threeyear period, it'll help you pay your loan on the Amaze.

Another advantage the Amaze has is that it's a newer model, unlike the City, which has been around for almost four years.

The Amaze is also a great car for the family. The cabin has generous room and all the features that you would want in a sedan. The Amaze has already proven in the market that a smaller car does not necessarily mean a compromise on features or on comfort.

If, on the other hand, you would prefer to buy the Amaze's petrol version, you would end up saving well over Rs 4 lakh over a threeyear term. That's enough money to buy a second small car for the family just about the time the loan on the Amaze is paid up.

OUR TAKE
With its 400-litre boot, the Honda Amaze has all the space you'll ever need for luggage. What's not to like?


LUXURY SEDANS: SKODA SUPERB ELEGANCE AT VS SKODA LAURA ELEGANCE AT

The price difference between the Laura and the Superb is about Rs 7.50 lakh (enough money to buy a Honda Amaze incidentally). And yet, the specifications are similar for the Elegance diesel versions, which comes with leather upholstery, seven-speed DSG gearbox, climate control, alloy wheels and audio controls on the steering wheel.

You also save an additional Rs 60,000 on the insurance over a three-year period and Rs 50,000 on the vehicle's registration.

Both cars run on the same engine, so the performance is similar. However, the Laura delivers a marginally better fuel economy as it is a lighter vehicle.

The Superb does score much better than the Laura on comfort, especially the rear seats, but the latter boasts of similar features from the same Skoda brand.

The Laura's trump card, though, is its 560-litre boot compared with the Superb's 565-litre boot, despite the difference in size. Plus, you can fold the rear seats down (on both cars) to increase the boot capacity over 1,000 litres.

So, for a slight compromise, the Laura offers almost everything the Superb does but at about 70% of the cost. A great deal by our reckoning.

Since both cars run on the same engine, prices of spare parts are also similar. Be it the Laura or the Superb, Skoda is known to make cars with a great build quality.

With such big savings, it would be hard to ignore the Laura and choose the Superb. Doing so might look very silly.

OUR TAKE
The Laura is a smaller version of the Superb. Why not save Rs 8 lakh and enjoy the same engine and huge boot?


AFFORDABLE SUVS (UNDER RS 10 LAKH): MAHINDA XYLO H8 VS MAHINDRA QUANTO C8

Mahindra released the Quanto after tax benefits were announced for cars under four metres in length. It also gave buyers an alternative to hatchbacks such as the Hyundai i20 and VW Polo. When you add up the savings, you end up with Rs 3.20 lakh.

But, there are compromises. The Quanto's last row (jump) seats are not as usable as the Xylo's and you get much less boot space.

OUR TAKE
With the cost benefits, the Quanto should be the poster boy for buying 'smaller' across price segments



**KEEP IN MIND**

RESALE VALUE: There are plenty of hidden costs of owning a car. One of these, and one that is often ignored, is the resale value of a car.

Depreciation accounts, on an average, for approximately 50% of a vehicle's purchase cost in the first five years. In fact, the moment you drive a car out of the showroom, its value goes down by about 10%.

Most depreciation is calculated for the first three years. So, if you decide to exchange a vehicle that is about three years old or less, you lose the benefit of lower average annual costs lost on resale. This means that if you were to use it for another year, it wouldn't depreciate much more, while your new car depreciates 10% in the first year alone.

It would be better to trade for a car at about five years of ownership.


Courtesy: AutoBild India

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