Ad closing in a few seconds...

Fuel prices – is now the time for petrol?

  • Petrol engines are closing the gap on efficiency
  • We pick three engines which stand out verses diesel
  • Find out if it's worth considering a petrol

Diesel-engined cars have been the default company car choice for years. Their typically superior fuel economy and lower CO2 emissions make sense for business drivers and create cheaper benefit-in-kind (BIK) tax bills.

The case for diesel is no longer as clear-cut, though. Petrol engines are closing the gap and are now much more efficient; what’s more, they don’t bear the current 3 percent BIK band levy that diesel-engined cars do so they can work out cheaper in terms of an employee’s monthly cost, even if their CO2 emissions are marginally higher.

Petrol cars are usually cheaper to buy too, and the P11D value (taxable price) also has an effect on the driver’s BIK, so it’s in their interests to choose a less expensive model.

Oil prices have dropped in recent months and costs at the pumps have followed suit. According to the AA’s most recent fuel price report, petrol is now 4.1p per litre less than diesel, so company car drivers who pay for their private mileage will have to rack up serious miles for a diesel to make sense during their out-of-hours journeys.

Case studies

Fiat 500 Twinair

Fiat’s miniscule Twinair petrol engine only has two cylinders, so it’s small and very light. It also has turbocharger for extra power so it’s zippy at low speeds. It’s available with the 500 city car among other models and in 0.9-litre Cult guise returns 70.6mpg and 92g/km. That leaves it in the 11% BIK band and means you’ll pay  £27 per month in BIK and £819.07 a year in fuel if you cover 10,000 private miles, which adds up to a total of £1142.07.

Go for an equivalent 500 1.3 Multijet diesel, which does 76.3mpg and emits 97g/km and you’re into a 15% BIK band with £39 per month and a fuel bill of £782.31. That’s a total annual cost of £1252.31 – so it’s actually works out £110.24 cheaper for the petrol over the same mileage.

Audi A3 Cylinder-on-Demand

Audi’s Cylinder-on-Demand technology cuts off two of the engine’s four cylinders under lighter loads such when the driver isn’t accelerating, which saves fuel. It’s available with the 1.4 TFSI 140 petrol engine in the fleet-favorite A3 Sportback SE and it returns 60.1mpg and 110g/km with the S Tronic automatic gearbox. That leaves it in the 15% BIK band, so a company car driver is looking at £56 a month in tax bills and £962.17 in fuel for 10,000 miles, a total of £1636.17.

The equivalent diesel, the 2.0-litre TDI 150 SE S Tronic, offers 62.8mpg and 116g/km, which means BIK band 19 and £77 per month. Combined with a £950.48 fuel bill that makes a total of £1870.48 for the diesel, which leaves the petrol A3 £234.41 to the better. More economical diesel A3s are available, but the two models here are direct equivalents in terms of power, transmission and trim level.

Volkswagen Polo BlueGT

The Polo BlueGT uses the same technology as the Audi A3, which cuts off two of the engine’s cylinders when they’re not needed to conserve fuel. It’s also quite powerful with 138bhp and can hit 62mph in 7.5 seconds. The 1.4 TSI model manages 58.9mpg and 110g/km, putting it in the 14% BIK band. That means tax bills of £46 per month and a £981.77 annual 10,000-mile fuel bill, so you’re looking at £1536.77 overall. 

There isn’t really a direct competitor to the BlueGT in the Polo line-up in terms of power, specification or price, which is why the 1.4 TDI 90 SEL diesel comes out on top here. It’s good for 83.1mpg and 88g/km, which means a £718.29 10,000-mile fuel bill, a 14% BIK band and tax costs of £40 per month. That’s £1204.29 overall and leaves the diesel Polo ahead by £332.48, but it also costs £1090 less than the BlueGT and doesn’t have anything like the same performance.

Fuel prices

The latest AA fuel price report states petrol prices are now down to 127.2p per litre and diesel costs 131.3p per litre. That’s a reduction of 3.3p for petrol and 6.9p for diesel since the start of 2014. This has resulted in a price war at the pumps – not so much at motorway service stations, which are traditionally more expensive, but it’s very much the case at supermarkets (the AA report mentions Sainsbury’s in particular), which now charge 125.4p on average for a litre of unleaded – 1.8p less than the national average.

The best way to keep your fuel costs down is to drive smoothly and steadily, avoiding harsh acceleration or braking. Keep your windows up and remove anything like bike racks or roof boxes that are not in use to improve the car’s aerodynamics, which has a positive knock-on effect on economy.

Conclusion

Though diesel is likely to remain the dominant choice for company car drivers there is a clear case for choosing a petrol if your choice list allows. Powerful, low emissions petrol engines make sense and although we used official manufacturer mpg figures in our calculations it’s worth remembering that, in real world conditions, diesel engines often don’t generate the best economy around town or at lower mileages – and that’s where petrols excel. There’s no guarantee oil prices will keep falling but if they do then petrol will continue to drop in price.