Demand for Diesel cars to rise say industry honchos

The recent hike in petrol prices (up by Rs. 5 per litre) will increase the demand for diesel cars in India.

“If the trend of a high differential between petrol and diesel continues, the share of diesel car variants in our total sales will increase to 50-55%,” Shashank Shrivastav, Chief General Manager, Maruti Suzuki, was quoted as saying by the Economic Times.

Shrivastav added that at current fuel prices, the cost of running a diesel car is Rs. 2 per km while that of running a petrol car is Rs. 4.50 per km. He mentioned that Maruti Suzuki has to offer more diesel variants and that the company is scaling up production of diesel engines from 2 lakh per annum to 3 lakh per annum. Also read: Car sales in May, June likely to dip due to rise in fuel prices

“Currently, diesel-powered cars comprise 30% of our sales but we expect this to rise to 40% of our sales and this will probably be the same for the rest of the industry, too,” P Balendran, Vice-president, General Motors India was quoted as saying.

GM India will launch a diesel variant of the Chevrolet Beat small car in July 2011. The diesel Beat is expected to be priced at Rs. 50,000 higher than the petrol Beat which is priced ranging from Rs. 3.55 lakh and goes up to Rs. 4.66 lakh for the top-end variant.

Many global auto giants are planning to offer more diesel variants of their current models while others are already capitalizing on the ‘dieselization’. Maruti Suzuki’s diesel variants of the Ritz, Swift, Swift Dzire and SX4 sell in almost equal or slightly more numbers than the corresponding petrol variants.

Tata Motors, which has always been known for its diesel cars sell high numbers of the Indica Vista, Indigo eCS, Indigo and Manza models. Volkswagen India has grabbed a 2% market share as it offers diesel variants in all of its models that include the Polo, Vento, Jetta, Passat and Phaeton.

Toyota has diesel variants of the Innova, Corolla Altis and Fortuner which have contributed to significant sales and the company plans to launch an Etios diesel by early 2012. Honda too is planning to launch a diesel variant of the City, Accord and CR-V models in the next few years.

Experts feel that though diesel cars cost more than petrol cars, buyers find the former a better option due to price hike. Further, Indian car owners tend to replace their cars every three years nowadays and hence, they choose diesel cars for short-term gains.

Fuel-efficiency and running cost are two major characteristics that make diesel cars lot more attractive. For instance, car users who drive more than 50-60 km will find diesel cars a wiser option as the running cost is almost half of that of petrol cars.

Currently price of petrol per litre is Rs. 63.37 (New Delhi), while diesel costs Rs. 37.75 per litre. Soon after the petrol price hike was implemented on May 15th, there were reports that diesel prices will also be hiked by Rs. 4. Related: Petrol prices rise Rs.5, diesel to follow

After the deregulation of petrol in June 2010, the prices have been hiked eight times till now. There are speculations that the Indian Government may deregulate diesel prices. When this happens, the favourability of diesel cars will eventually go away and petrol cars will gain their lost market once again.