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        Shrinking fuel price differential boosts demand for petrol vehicles in India

        CarTrade Editorial Team

        CarTrade Editorial Team

        Indian auto makers are are changing their production strategies as demand for petrol vehicles has surged ahead lately, due to the shrinking price differential between the two fuels. The consistent increase in the price of diesel fuel has made sure that diesel vehicles are now 15 to 20 per cent more expensive than their petrol counterparts in the domestic passenger car market.

        As per reports, the rapid rise in demand for petrol cars has put several models on the waiting list. The car makers have increased their production of petrol vehicles, in order to meet the recent spurt in demand witnessed among the domestic car buyers. For instance, General Motors India, a subsidiary of the American auto maker, has decided to recalibrate its production strategy, since sales recorded by petrol vehicles have increased by two folds in recent months. The company saw its total sales comprising hatchback models and petrol sedans surging ahead from 20 per cent to 30 per cent, in one year.

        Expressing his opinion on the same, P. Balendran, Vice President (VP), Corporate Affairs, General Motor India Private Limited, was quoted as saying, “We have flexible production for both the fuels at our Halol plant. To meet the escalating demand for petrol, we are increasing production of these cars in line with the changed customer preferences.” Balendran has revealed that the company is assembling more petrol units of its Sail entry level sedan, which currently has a waiting period of three months.

        Reportedly, of the total vehicles sold in the domestic market during April 2013, the petrol cars contributed to an impressive 57 per cent share, which was 4 per cent higher as compared to the year-ago period. In April this year, excess 2,717 petrol cars were sold over the figure recorded in same month of 2012. Industry experts feel that this figure is set to increase further during the next few months, on the back of the rising price differential between the petrol and diesel fuels. At present, the fuel price gap has shrunk to Rs. 13.4, as compared to Rs. 32.27 in May 2012.

        Speaking on the same subject as Balendran, Rakesh Srivastava, Senior VP, Sales and Marketing at Hyundai Motor India Limited, was quoted as saying, “In the past few months, petrol models are making a resurgence on account of reduction in price differential in fuel types that has led to a change in our production pattern.”