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Petrol cars gain on diesel-run variants in India

Petrol cars gain on diesel-run variants in India August 20, 2014 by Mike Henshaw

Following on from our recent thoughts on the 'diesel debate'  it's really interesting to note that in India petrol cars are gaining on diesel-run variants, with Indian consumers shifting back to petrol-run passenger vehicles, boosted by falling petrol prices and the narrowing price gap between the two fuels.

Diesel cars have enjoyed a smooth run for more than two years as the fuel costs less than petrol and offers better mileage, making such vehicles a preferred choice for India's cost-conscious buyers but now the shifting trend, coupled with an upturn in the auto market, is making manufacturers rework their production schedule in the run-up to the festival season when sales spike up.

At the heart of this are two key facts;  the government is phasing out diesel subsidy and petrol, deregulated since June 2010, is getting cheaper.
Diesel in India is nearly 14% costlier now than a year earlier, while petrol has become slightly cheaper year-on-year.

This trend in the automobile market is quite pronounced on some models.
When Honda Cars India launched its compact sedan Amaze in 2013, 80% of the buyers opted for the diesel version. The Amaze was Honda's first diesel offering in India and was launched to meet the-then growing demand for diesel cars.

However, in July 2014, just a little over half the buyers for Amaze chose a diesel variant.
Honda witnessed a similar trend for the new City, with just 50% of buyers preferring diesel in July compared with 70% at the time the mid-size sedan was launched in January this year.
Maruti Suzuki, the country's largest carmaker, has shelved plans for a new diesel engine plant  and is concentrating on its petrol models as it strives for higher market share. "While diesel car sales have declined 7%, sales of petrol cars have grown by almost 11% in the past few months," said a senior executive. "

Add to the mix that maintenance cost of petrol cars is usually lower and the fuel is more environment friendly; not surprising that industry sources say they expect the shift in customer preference to continue and are adjusting their strategies accordingly.

Certainly 'food for thought' in other markets too.


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