Automotive Industry cheers with the second successive price reduction of petrol

The slash in the price of petrol is definitely a boon for the automotive sector which is already limping under a demand slump. However, the industry has demanded for more such initiatives to pave the large gap between the price of diesel and petrol.

Senior Director, Society of Indian Automobile Manufacturers (SIAM), Sugato Sen, said, "It is a very good step for the auto industry. We need many more such steps to reduce the price differential between petrol and diesel." Likewise, Senior Vice President, Sales and Marketing, Honda Siel Cars India, Jnaneswar Sen expressed that the move is in a positive direction. He added, "However, it is still not enough to have a level playing field between petrol and diesel vehicles as the gap in the prices between the two fuels is very high."

According to a senior official of Maruti Suzuki India, any reduction in the price of the fuel is a boost for the market as it will brings down the running cost of the cars. But he sounded skeptical saying "However, this only partially offsets the previous big hike." To reduce the burden on the common man who is already battling inflation, petrol price has been brought down by Rs. 2.46 on every litre in the second reduction in this month. Earlier, the price had been slashed by Rs. 2.02 per litre from June 3, 2012.

These two successive price revisions have reduced the massive hike of Rs. 7.54 per litre declared in May by half. The price hike was the record highest in the history of automotive industry. The industry has been feeling the pressure due to low sales volumes of the petrol cars and shift of inclination towards the diesel cars owing to the difference in the price of the two fuels. In last seven months, the car sales have moved at the slowest pace. SIAM reported a 2.78 percent growth rate due to the high interest rates and soaring petrol prices. The impact was so severe that many leading car manufacturers like Maruti Suzuki, General Motors, Tata Motors and Fiat are opting for temporary shutdown of their production units to reduce stock piling of the cars.