Maruti Suzuki, India’s largest passenger car manufacturer, believes that the demand for petrol cars has been rising steadily in recent months following the gradually rising cost of diesel fuel in the country.
07 Oct 2014 | 5320 Views | By Jaishankar Jayaramiah
Maruti Suzuki, India’s largest passenger car manufacturer, believes that the demand for petrol cars has been rising steadily in recent months following the gradually rising cost of diesel fuel in the country. The trend is likely to continue, leading petrol car sales to surpass diesel cars in the near future.
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Maruti Suzuki, India’s largest passenger car manufacturer, believes that the demand for petrol cars has been rising steadily in recent months following the gradually rising cost of diesel fuel in the country. The trend is likely to continue, leading petrol car sales to surpass diesel cars in the near future.
Talking to Autocar Professional, Tarun Garg, vice-president (Sales & Marketing), Maruti Suzuki India, said: “The diesel penetration is coming down in the past two years as its price (diesel fuel) has escalated significantly. This trend has dragged down the sales in the Indian diesel car market.”
In 2012-13, diesel penetration was 58 percent but it fell to 54 percent in 2013-14. This fiscal, till September 2014, the rate of diesel penetration has stood at 54 percent and there are indications that it may go down further.
Garg was in Bangalore on Monday to launch the company’s new premium Ciaz sedan. According to Garg, the Ciaz received orders for 10,000 units thus far from across the country. Of this, 60 percent of bookings are for diesel while the remaining 40 percent for petrol versions. The Ciaz comes with four variants both in petrol and diesel versions. The price gap between diesel and petrol is narrowing significantly and at present the price difference is only Rs 9 when compared to Rs 30 once upon a time,” he added.
“We expect the diesel penetration may stabilize in the range of 45 percent in the future looking at the current trend,” he added. However, he declined to give any projection for the timeframe to touch 45 percent levels.
However, the latest research report released by Crisil Research says that diesel car sales in India will come down to 45 percent by the end of 2014-15 while petrol car sales will increase to 55 percent from 42 percent.
Furthermore, the report indicates OEMs historically have fixed higher prices for their diesel versions in India on the back of technology costs, better mileage and cheaper cost of fuel and demand. The price difference between diesel and petrol-powered cars ranges from about Rs 1 lakh for small cars to Rs 3 lakh for luxury sedans. In percentage terms, diesel cars in India are priced 20 to 25 percent higher than the petrol variants for the same model, which is higher than the average price premium of 10 percent in the European Union.
“What this trend will also do is ensure the return to dominance of petrol vehicles. Manufacturers seem seized of the trend and have recently launched petrol variants in sedans as well as utility vehicles (UVs) – segments traditionally dominated by diesel. In the last fiscal, the share of diesel sedans and UVs was 70 to 75, while in small cars it was about 35 percent,” the report notes.
According to fuel price research firm Mypetrolprice.com, diesel price that stood below Rs 20 in 2002 crossed Rs 40 in 2011. Within two years in 2013, oil marketing companies hiked diesel prices to above Rs 50 and it surpassed Rs 55 levels in the current year; currently, it is oscillating between Rs 58 and Rs 59. Meanwhile, petrol prices that stood at Rs 30 in 2002 fell to Rs 23 in 2003 and steadily increased to cross the Rs 45 level in 2006, rising to Rs 65 in 2011 and Rs 75 in 2013. However, at present, petrol prices are down to below Rs 70 levels, which makes a Rs 9-Rs 10 difference between petrol and diesel prices in many parts of the country.
With car markers lining bumper discounts for the current festive season on both their petrol and diesel versions, prospective buyers are taking cautionary steps in choosing their cars, an industry expert said.