Sale of diesel automobiles overtake petrol cars’ in India

For the first time, more diesel automobiles were sold in India as a result of the lower retail price of diesel fuel. Since December last year, diesel automobiles captured more than 50% of the passenger vehicle market, which includes cars, SUVs and other utility vehicles. Diesel vehicle sales remained at almost the same levels despite marketing incentives from petrol vehicle makers. Data show that sales of petrol cars and other vehicles dropped by 15% between April 2011 and February 2012, whereas demand for diesel vehicles went up by 35% during the same period. The unprecedented rise in demand for diesel vehicles has resulted in long waiting periods for some models. India’s biggest carmakers, most of which do not have diesel variants, are facing an uncertain future. The country’s biggest seller, Alto, has seen sales go down by 11% during the period, while sale of Hyundai’s i10 has gone down by 23%. Volumes of another blockbuster model, WagonR, have slipped by 11%. Honda City’s sale is down by 27%.
Sale of diesel vehicles on the upswing
Cars like GM’s Beat have seen volumes go up by 45% after the introduction of its diesel variant. Volkswagen Polo’s sales are up by 42%, Hyundai Verna’s by 136% and Volkswagen Vento’s by 109%. Maruti’s Swift diesel sales went up by 10% while sales of the petrol version went down. Following these developments, Maruti Suzuki announced a fresh investment of Rs1,700 crore (US$2.69 billion) to build a new diesel engine plant with an annual capacity of 3 lakh units. The company already has a plant with a 4 lakh-unit diesel engine capacity. “The demand has strongly shifted from petrol to diesel. In most of the models, actual bookings are 80-90% for diesel variants,” said RC Bhargava, Maruti chairman. Bhargava said petrol cars will have a “de-growth” in fiscal 2012-13. He said Maruti expects that petrol car volumes will decline by 50,000 units during the next fiscal year, even as diesel volumes surge by 1.5 lakh units. Hyundai, which currently imports diesel engines for its models like the i20 hatch and Verna sedan, is expected to invest Rs500 crore (US$792.8) to construct a diesel engine plant. “The market has shifted strongly towards diesel, but we have limitations at the moment as we do not make the engines here,” said Hyundai India Director Arvind Saxena. Ford, GM and Volksawgen are expanding diesel car production to meet the upsurge in demand. (March 27, 2012)