Thursday, March 07, 2013

Buying SUV? Wait

Read Kannada version of this article here 

Buying an SUV is the new trend among Indians. While small cars and sedan sales are declining, demand for SUVs on the rise. Having a car is no longer a great thing. Only bigger, expensive cars can get you some status symbol. No doubt, SUVs will give you several benefits, such as
·         Ability to carry more people
·         Ability to handle bad roads
·         More powerful Engines, looks and peer recognition.
However, buying an SUV without proper calculations and assessment is a sheer waste of money. Compared to small cars, SUVs have following disadvantages:
1.       Calculate your annual insurance premium- a 18 lakh + SUV (such as Aria, Ford Endeavor, XUV500)’s annual insurance premium will be in the range of 50-60k+. At this price you can buy a new motorcycle. Can you justify spending 5k per month just on insurance premium? If you’re going out on just one weekend every month, for a day or two, renting an SUV makes more sense than buying one. Only if you’re making full use of your vehicle all through the month, this spend is justified
2.       Mileage: SUVs give about half the mileage of a small car. A diesel swift, priced at 7 lakhs, can easily give 18-20 kmpl per litre. A tata safari, priced twice that amount, gives a mileage of 10-11kmpl approx. This means spending twice the money for every km. If you’re driving solo most of the time, then SUV is just wasting fuel. It is also harmful on the environment.
3.       Do you really need 4x4? Some SUVs come with 4x4 variant and many people buy this variant without real need. 4x4 mechanicals add to the weight of the car, decrease fuel efficiency. Most of the time a 4x2 would work just fine. Unless you’re going out a lot on bad roads/adventurous drive, this extra spend is just waste of money.
4.       Space: SUVs take lot of space. Parking, driving in city is all additional pain in an SUV. You'll feel you'd have been better off with a small car.
5.       Speed: Having a powerful engine doesn't necessarily mean top speed. SUVs are heavy and part of engine power is spent just in pulling this extra weight. A 75PS swift diesel can hit 160 kmph faster than an 140PS old safari or an 102PS Toyota Innova. So on an highway, a SUV may not always beat a small car.
6.         Maintenance: SUV service and space costs will be proportionate to the price of the vehicle.
Buying SUV is one thing, maintaining it is another (fuel, insurance, maintenance). If you use your car for home-office drive with occasional long drive, you really don’t need an SUV. Try to manage with a small car/sedan and save some money.

I don't intend to discourage you from buying SUV. Just suggesting to cross check if the spend is well justified.  Read this post on "SUV Purchase- some calculations"
So what about Compact SUVs?
Compact SUV is the new category now. Maruti Ertiga, Renault Duster, Mahindra Quanto, Ford Ecosport are all competiting in this space. Compact SUVs are a compromise between a small car/sedan and a big full fledged SUV. 


Dheeraj Sharma said...

Again sir, very valuable thoughts. I had been going through all this for past few weeks and the insurance point was really bugging me. Thanks again for sharing these thoughts

Debopam said...

A nice review and good points raised.....

Trails of a Traveler said...

Well pointed article.

In most of the cases buying an SUV is only a status symbol or to make the eye brows arch and nothing else.
For the day-to-day use in the city a hatchback or small car will be ideal..


Janit said...

I do agree that the best way to travel is in a a rented car with a chaffeur. Nice analysis Shrinidhi.

Shrinidhi Hande said...

All: Apologies for a very late reply

True. Insurance premium money alone is good enough to cover rental expense for a weekend every month.

@Deb: Thanks

@Ram: Agree

@Janit: Thanks