The budget 2012 is expected to bring bad as well as good news for different departments. As far as the automobile industry is concerned, the upcoming budget is expected to increase the price tag of diesel cars. There has been sudden surge in demand for diesel cars in recent years. This shift towards diesel car is primarily due to rise in petrol prices.
Every automobile company in India has started introducing diesel variants of different models. The popularity of diesel variants can be witnessed from the fact that Maruti Swift petrol variant has a waiting period for two months whereas the diesel variant has a waiting period of more than 6 months.
To meet the increasing demand for diesel variants, Maruti Suzuki, India’s leading car manufacturer, sought assistance of Fiat for getting 100,000 engines annually for the next 3 years. The rise in demand for diesel models prompted Renault India to introduce its new Pulse model directly in diesel variant.
Activists raising concerns about environment along with few members of the finance ministry are in favour of increasing prices of diesel cars either by imposing ‘Diesel Tax’ of Rs. 80,000 on all vehicles or eliminating excise benefit for small diesel cars. According to Arvind Saxena, Vice President (Sales & Marketing), Hyundai India, the Indian Government needs to devise clear policies regarding diesel cars in the country. He added, "You have to understand that diesel is not just getting popular in India, this is a worldwide phenomenon."
At present there is a price difference of around Rs. 1, 20,000 between petrol and diesel variants. Diesel powered cars require an additional maintenance cost. Nevertheless, majority of Indian customers are choosing diesel over petrol variant. Moreover, with the help of latest technology, the automobile companies in India have started introducing modern injection diesel cars that reduce maintenance requirement.
Therefore, even if the price of the diesel cars is hiked from Rs. 80,000 to Rs. 2 lacs, it is commonly believed that Indian customers would opt for diesel variants. As far as the petrol prices are concerned, they will remain stable due to elections in Uttar Pradesh and other 3 states.
The budget 2012 will most probably bring in the news about the hike in excise duty for diesel cars. To counter this, Maruti Suzuki has strategically decided to come up with models that will be economical and powered by low emission fuel like LPG and CNG.
