Demand for diesel cars moves north after the petrol price hike

With the difference between petrol and diesel prices going up to more than Rs 25 per litre, the demand for diesel cars has shot up and carmakers are bringing in more models to cater to the cost-sensitive Indian consumers.

The month of April saw a decline in the number of total car sales. High interest rates on loans and the recent hike in petrol prices are expected to hit car sales further. The high cost of petrol due to seven successive price increases has resulted in most middle-class consumers looking at diesel cars as a viable option due to the lower running costs.

General Motors India managing director Karl Slym said, “ The demand for diesel cars is fast catching up. At present the diesel market is around 28 per cent and this is expected to reach 35 to 40 per cent in the next few years.” Most of the new launches are made keeping in mind the demand for the diesel option and in some cases diesel variants are doing better than the petrol version. For example, demand for diesel models like Maruti Swift hatchback, SX4 and Dzire is higher than the petrol variants.

According to officials at Maruti Suzuki India Ltd (MSIL), diesel variants account for nearly 70 per cent of the total sales of Swift, Dzire and SX4. “We have seen an increase in demand for diesel cars and the reason is simple — lower running cost that fits the pocket. We see the trend to be only becoming stronger in the coming months,” Shashank Srivastava, chief GM (sales & marketing) at Maruti Suzuki said.

Recognising the trend, Ford India is going to invest $ 72 million to boost capacity at its local engine plant, with the main thrust being on producing more diesel engines. The sales of Ford India have shown a marked improvement after it introduced its new diesel variants.

Most of the companies like Volkswagen, Hyundai Motor, Tata Motors and General Motors are adding more diesel variants to their portfolios. Japanese premium carmaker Honda, which does not offer any diesel variant, appears to be losing out in sales with even its iconic Honda City being overtaken by some diesel variants in the same price bracket.