The waiting list for diesel cars and the discounts on the petrol cars in India are expected to be further extended. It is said that there will be increased demand for diesel cars due to higher mileage of diesel cars and consistent pricing of the fuel against the sharp hike of Rs. 7.50 in petrol price. The car market of India already suffers due to inflation, slow pace of economy as well as higher petrol price and may find a saviour in diesel models, for companies and customers alike.
While petrol powered vehicles are available off-the-shelf, manufacturers find it hard to balance the demand-supply flow of diesel models, which puts them under pressure. The demand for diesel cars is so high that the best selling car from Maruti Suzuki, Alto, is being offered with Rs. 30,000 rebate, but is still unable to find buyers. Another company on the bandwagon is Hyundai, which offers total rebates worth Rs. 42,000 (discounts and other offers) on Santro and Rs. 46,500 on i10. Likewise, the petrol models from American manufacturer Ford come with discounts ranging between Rs. 12,000 and Rs. 15,000.
Due to the downward spiral of the Indian Rupee against the US Dollar, personnel of many companies feel that the situation is quite difficult since their input costs are rising. Deputy Managing Director, Toyota Kirloskar Motors, Sandeep Singh, said, "It is terrible and market sentiments are bad."
Director, Marketing and Sales, Hyundai India, Arvind Saxena, stated, "Demand is already under pressure on account of inflation and high interest rates. A hike of such magnitude (on petrol price) is neither good for the customer nor for the industry." The Japanese car maker has launched the 'Petrol Price Lock Assurance' scheme, under which it offers additional discounts on petrol cars in order to protect buyers against the recent hike in petrol prices.
The companies are sceptical about increasing the price of the cars due to the rise in imported parts cost owing to depreciation of rupee as it will further slow down the demand. While the diesel market has expanded by 35 per cent, the petrol segment witnessed a decline of 15 per cent during last fiscal.
Compared to running cost of Rs. 5.22 per km of petrol vehicles, diesel cars offer much better value at Rs. 2.15 per km of running cost, which is less than half as compared to the former. The break-even period for the diesel model has reduced as well as the price hike has widened the gap between the costs of both the fuels. Buyers can now recover the cost of diesel cars, which is higher than that of petrol vehicles, in just two years seven month, which took eight years in April 2002.
Managing Executive Officer – Sales and Marketing, Maruti Suzuki, Mayank Pareek, said, "The game has changed, and has moved completely in favour of diesel. Even people who do not require a diesel car, due to a low daily run, are going for them. While we are trying to educate customers on why they should buy a petrol car, it is tough and a big challenge."
Officials at two wheeler companies are worried that vehicles with better mileage may get preference, even though demand will not go down. According to Atul Gupta, Vice President, Suzuki Motors India, "People will go for more lower-cc products rather than higher-cc. So we expect that the 100 cc and 110 cc segments will gain more, while the 150cc will be under pressure. There will be a shift in segments."
