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Posted at: Oct 12, 2018, 12:15 AM; last updated: Oct 12, 2018, 12:15 AM (IST)

Diesel cars lose steam

Sale of petrol variants up as price gap between two fuels narrows
Diesel cars lose steam
Illustration: Sandeep Joshi

Vijay C Roy

Tribune News Service

Chandigarh, October 11

Petrol cars are expected to leave their diesel variants behind this festive season as automobile dealers expect more demand for petrol vehicles because buyers are unwilling to pay Rs 1 lakh premium for diesel variants, especially when price difference between the two fuels have narrowed significantly.

The economics of owning a diesel car has changed, say dealers based in North India. The diesel is only Rs 7-9 per litre cheaper compared to petrol in most of the North Indian cities. Thus, savings on account of fuel cost is no longer attractive as was the case when the price difference between the two fuels was Rs 32.77 per litre in mid-2012, they said.

"The share of diesel vehicles sales from our northern region has reduced to 55% from 70% a year ago. Similarly, the share of petrol vehicles has, however, increased to 45% from 30% earlier," said an executive of Maruti Suzuki. Maruti is market leader in the passenger car segment.

The demand for the petrol version of Swift, which accounted for 35% earlier, has touched the 50%-mark, he said. A senior sales executive working for Tata Motors said people prefer petrol vehicles, especially in hatchback and entry-level sedan segment.

Sales of passenger vehicles (cars, utility vehicles and vans) in India had jumped by 7.89% in 2017-18 to 3.28 million units. The share of diesel vehicles had, however, declined to 38% that year.

The growing popularity of petrol vehicles has prompted companies such as Mahindra & Mahindra, Tata Motors and Toyota to aggressively look beyond the diesel portfolio, industry experts said. For example, M&M, the company with the strongest sales of diesel vehicles, last year launched a petrol variant of KUV100. Similarly, Toyota introduced Yaris this year.

Dealers said frequent increase in retail prices of diesel in small doses since January 2013 significantly narrowed the price gap between petrol and diesel rates, making cost economics of owning diesel passenger vehicles less attractive.

Current price difference between petrol and diesel rates is just Rs 6.74 per litre in Chandigarh, Rs 7.55 in Karnal, Rs 8.63 in Shimla and Rs 13.40 in Ludhiana. If the gap between diesel and petrol rates narrows further in Punjab, then sale of petrol vehicles in the state would also jump significantly, Joshi Autozone managing director Deepak Joshi said.

"Buying preference in the entry, mid and to some extent in utility vehicle segments has shifted in favour of petrol, but not in the premium and the luxury segments," he said.

Diesel versus petrol

  • Rate gap in May 2012 was Rs 32.77 per litre 
  • It started narrowing since 2013
Current scenario

 City Price gap

  •  Chandigarh Rs 6.76
  •  Karnal Rs 7.55
  •  Shimla Rs 8.63

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