TODAYonline

Will Diesel tax cuts be attractive enough to win car buyers over?

Initial predictions that buying a diesel car (like the Volkswagen Passat pictured here) makes financial sense for drivers who clock around 30,000km a year could be wide of the mark, at least for higher-end models.

The Government announced last week that the diesel tax — charged over and above normal road tax — will be substantially lowered from July.

Currently four times of road tax, the supplementary diesel tax payable will be changed to $1.25 per cc of engine displacement. The news has been welcomed by local car distributors, especially those handling European brands which have a wide range of diesel cars in their portfolio.

A number of them are already working out details of which diesel models are suitable for the local market. At least one German brand is said to be considering offering incentives for customers to buy diesel cars, partly to offset their higher purchase price.

But even car owners who drive a lot may not stand to save money by making the jump from petrol to diesel power, especially if they choose a big-engined diesel car.

For instance, the diesel tax payable on a 3.0-litre BMW 530d works out to $3,741 per year.

Even with the car being over 13 per cent more economical than the petrol- engined 530i, and diesel costing $1.447 per litre compared to $1.976 for 98-octane petrol, its owner would need to cover over 70,000km a year just to offset the diesel tax.

The sums make more sense for smaller diesel cars. A 1.2-litre Fiat Grande Punto diesel, for example, attracts just $1,560 a year in diesel tax.

Someone who chooses it over the petrol model and drives over 31,500km a year would make that amount back in fuel savings, all the while enjoying the greater torque or pulling power of the diesel engine.

In fact, it may well be better performance rather than lower costs that entices customers to switch to diesel.

Although diesel engines don't have big horsepower numbers, they produce plentiful torque from low engine speeds, making them ideally suited to Singapore's stop-start traffic conditions. Torque is what gives the feeling of strong acceleration.

BMW's cheapest diesel 5 Series, the 2.0-litre 520d, produces 350Nm of torque. The 3.0-litre petrol 530i can only manage 320Nm. This means the 520d is likely to feel as quick in most everyday driving situations.

A test drive could be all that's needed to convince customers to go the diesel route.

Engineer W N Teo, 34, is one person who is looking forward to the lower diesel tax taking effect. She tried a modern diesel car for the first time in Germany recently and came away impressed by its performance.

"The Volkswagen Golf TDI I drove was smooth, quiet and so much more powerful than the petrol version," she said. "I'll definitely buy a diesel car in Singapore if one is available at the right price." — Colin Yong