In recent times, fuel pricing is an issue that has been immensely scrutinised by the media, people and experts in India. The scrutiny is quite understandable as prices of fuels have a direct impact on lives of people, whether they are consumers of producers. This premise has great relevance when it comes to the car market in India. The price of petrol or diesel directly affects the running cost of a vehicle. In recent times, hikes in rates of petrol and diesel have had an adverse effect on the consumer sentiment in the country. While petrol has been highly expensive for a while now, it is the rise in price of diesel that has hit the market pretty badly. According to a recent report by TNN, for the first time in a decade, the demand for diesel has gone down.
R S Butola, Chairman of the Indian Oil Corporation, was present at the 3rd World Energy Summit, where he spoke about the demand of diesel in the country. "This year, there has been 0.8-1% de-growth. Small adjustments of 50 paise every month has brought some parity with cost. We believe that market forces need to be allowed to have proper inter-play (on demand and consumption),” he said. The Indian government has adopted stringent policy on the deregulation of prices, wherein it has been increasing the rate of diesel by 50 paise per month for a long time now. This deregulation has affected demand of the fuel in the country.
As far as the Indian car market is concerned, there were reports around the month of August, which stated that sales of petrol vehicles overtook that of diesel ones. Many car makers reported an increase in sales of models powered by petrol engines, thereby signifying the decline in demand for diesel. Customers across the country preferred diesel cars because of cost-effectiveness and fuel economy. However, the difference between price of diesel and petrol has reduced considerably, thereby making people reluctant.
Despite this, many models, which have been immensely successful in 2013, are diesel powered cars. In fact, Hyundai Grand i10 and Honda Amaze, two of the most popular cars in terms of sales, have been achieving such figures due to their diesel variants. Honda Amaze, in particular, has become a hit largely due to its i-DTEC diesel engine, which works on the Earth Dreams technology. Sales figures of Honda Amaze are quite incredible and suggest that a lot of people still prefer diesel cars. The Japanese car maker, even in the future, would be looking to build upon this success by launching City diesel in the January 2014. However, Grand i10 and Amaze are exceptions as there has been a direct decline in demand for many diesel cars. Experts feel that if prices of diesel keep increasing like this, things would definitely worsen for the Indian car market. The state of the Indian economy and international oil prices have adversely affected scenarios.
