Auto makers betting high in Indian auto market with new diesel variants

Several auto makers are planning to play bullish on the Indian auto market with a decent number of diesel model launches. The second largest car maker of the country, Hyundai Motor has planned to expand its diesel portfolio of i20, Verna and Santa Fe with Elantra by the end of September 2012. Many other diesel burners are also gearing up in the arsenals of the other leading automakers; these include Multi Purpose Vehicles (MPV) like Nissan Evalia and Sports Utility Vehicles (SUV) from the alliance partner Renault, Duster. The domestic auto maker, Mahindra & Mahindra is planning to bet high in the Indian auto market with the much-awaited Mini Xylo and its new compact version of the Verito sedan.

Addressing the trend of the Indian market, Lowell Paddock, President and Managing Director, General Motors India, quoted, “The market has slumped but we are preparing to build volumes with three new launches this year, all of which would come in diesel options as well. Diesel models are selling, so the only way is to offer customers more choice here. The Sail hatchback and sedan would replace the Aveo and the Aveo U-VA, which come only in petrol options and are not doing that well. Except for the Spark, all our products would come in diesel variants by the end of the year.”

As per the analysis by Industry experts, the car makers in India expanded their diesel model production capacity by more than 35 per cent to take the numbers to 1.16 million units during the last fiscal. The research was done after comparing the data with figures of the corresponding period last year. On the other hand, during the same tenure the production capacity of petrol models in domestic market rationalised by 12 per cent and amounted to 1.75 million units.

Speaking on the biased production methodologies, Chief General Manager (Marketing), Maruti Suzuki India Limited, Shashank Srivastava commented, “Most manufacturers have already executed changes in production lines and are now more prepared to meet the demand for diesel cars. The overall sentiment continues to be negative at a time when availability has improved.”

The success of the company is mainly driven by its latest Utility Vehicle (UV) Ertiga, which alone felicitated the car maker with the badge of 'third largest UV maker of India'. The company presently rejoices with advance bookings of more than 47,500 vehicles and 87 per cent among the total sales comes from the diesel models.

In the premium hatchback segment, several auto makers are offering goodies and freebies on diesel models. Owing to this, the number of individuals approaching this segment for the first time surged 46 per cent from 24 per cent during the last two years.

Elaborating on the situation, Arvind Saxena, Director (Sales and Marketing), Hyundai Motor India, said, “Diesel vehicles used to contribute 16-17 per cent to our overall volumes till a year back. Now, the proportion has gone up to over 28 per cent. The market is slowing down and because of the price difference between the two fuels whatever sales are happening are mostly of diesel variants.”