Times are getting tougher for car makers in India as they are faced with a massive hike in petrol price and a proposal about levying additional excise duty on diesel cars. From some quarters, there has been a demand for the government to deregulate the price of diesel. The hike in petrol price has surged the demand for diesel cars upwards, sending the companies to the point of no return. Major car makers have already started investing in diesel powertrain manufacturing facilities and expanding the capacity of diesel car production.
There are reports about government hiking the excise on diesel cars and deregulating the diesel as well. This has not gone down well with the companies like Hyundai and Maruti Suzuki who had plans for India. With this new development, the car makers feel threatened about deteriorating demand for diesel cars as well, since the demand for petrol cars is already spiralling downward. They are further troubled by the reports that a duty hike proposal is being analysed by the Finance Ministry to stop the consumption of subsidised diesel by passenger vehicles.
Notably, companies like Honda and Toyota do not share the views of Hyundai and Maruti Suzuki. Vice President, Marketing, Honda Siel, Jnaneswar Sen, said, "The government should provide a level-playing field for petrol and diesel vehicles so that the buying decision depends on a consumers' desire for a particular vehicle and not government subsidy." Interestingly, the company had been losing its share in the market due to the lack of a diesel model in its line-up.
Japanese car maker Toyota has already appealed to the government to deregulate the price of diesel. The demand in car market as well as the growth of the industry is being hampered by the existing policy of the government to regulate the price of diesel, according to Toyota India. Since the demand for petrol cars has dropped dramatically, the car maker has requested the government to take proper measures and deregulate diesel price. As the customers hesitate to purchase petrol variants and opt for the diesel run cars, the manufacturers in the country are accruing losses at a rapid pace. The shift in the inclination of the car buyers in the country can be blamed on the frequent price hike of petrol and the control of government over diesel.
Managing director, Toyota Kirloskar Motors, Hiroshi Nakagawa, said, “This is not healthy. We expect the government to take some action.” He further clarified that the reason behind the day by day slump in demand for petrol cars is solely due to the subsidised rate of the diesel.
Since diesel-run cars prove to be more economical in terms of average running costs compared to the petrol driven vehicles, the demand for diesel car is on the rise. At Rs. 2.15 per km for diesel cars and Rs. 5.22 per km for petrol models, the running cost for the former is almost half of that of the latter. However, this may prove fatal for the environment as the current favourite fuel is known to be a 'dirty fuel' since it is known for higher emissions.
Meanwhile, a new line-up of diesel variants of existing models is on the map of Toyota. Even though the car maker did not divulge any information, it is also considering a diesel powertrain manufacturing facility in the country. This is an attempt to localise the production of powertrains for its Liva, Etios, Innova and Fortuner models and not depend on imports only.
