Share of diesel car sales declining in India except SUVs

The share of diesel cars in hatchbacks and sedans has fallen to under a quarter, which means that more than three cars out of every four sold are now run on petrol. As per estimates, the share of diesel in car sales (hatchbacks and sedans, excluding SUVs) has fallen to 23%, coming down from a high of nearly 47% in 2012-13. The numbers are even more encouraging as the trend comes at a time when pollution figures have been at alarming levels across many Indian cities and there have been calls for controlling vehicular emissions, especially from diesel ones.
The trend has been stark for some of the biggest car manufacturing companies when it comes to small cars/hatchbacks and sedans:
  • Honda Cars India has seen the share of diesel in overall sales shrink from 67% in 2013-14 to just about 25% at the end of 2016-17. Honda City sedan, which had 60% of sales coming from diesel in 2014, now gets only 20% of its volumes from the diesel fuel.
  • The same is the case for some of the models of Maruti Suzuki, the country’s largest carmaker. For example, diesel variant of Ciaz sedan now accounts for 30% of sales as against 60% just some time back. However, diesel still remains strong for Maruti as some models such as Brezza mini SUV do not have a petrol variant.

The trend is only going to get stronger, say company executives who are now preparing for a life beyond diesel as the government pushes for cleaner technologies where the current focus is on electric drive trains.

As per Maruti chairman R C Bhargava, the trend is only going to get stronger, at least in the passenger cars segment. “I don’t see a big play (for diesel). The market does not like diesel. I expect its share to come down.” “Diesel is losing ground now, and the shift is quite pronounced,” as per Rakesh Srivastava, director (sales & marketing) at Hyundai India. (both as quoted in TOI)

There are several factors behind the trend of declining sales of diesel hatchbacks and sedans:
  1. Narrowing gap between petrol and diesel fuel prices: With the difference between petrol and diesel fuel narrowing down, many people now prefer to opt for petrol versions. Against a gap of Rs 27 around the middle of 2012, the difference in the retail price of petrol and diesel fuel has narrowed down to only ~Rs 10 now.
  2. Expensive Maintenance: Diesel cars, while giving higher fuel efficiency, require more expensive servicing and regular maintenance when compared to their petrol versions.
  3. Higher Acquisition Cost: The higher maintenance comes at the top of an already expensive acquisition cost  as diesel variants are priced higher than their petrol versions, by at least Rs 1 lakh. Since diesel powered cars are costlier than petrols, buyers need to drive diesels for much longer distances to make up for the higher initial cost.
  4. Lower registration period for diesel vehicles:  In Delhi/NCR and certain other regions,  courts have banned diesel cars older than 10 years, reducing resale value of older diesel cars. This uncertainty over the future of diesels is another factor pushing customers towards petrols.
  5. Dangerous Emission Levels: Diesel cars have also been in the spotlight for emission scandals, and customers, who’re now more environment conscious, are avoiding diesels.  The awareness levels about the dangerous emissions of diesel vehicles is still low, but increasing gradually due to media spotlight and court actions.

The only challenge to the trend, however, remains the rising share of  SUVs in the country, where nearly 7 out of 10 buyers opt for diesel powered ones. Diesel is traditionally the preferred choice in SUVs, though the mindset towards petrol is also finding some strength here. Take for example the Creta SUV where more than 30% of sales are coming from petrol version.  In case of many SUVs, the only reason buyers opt for diesels is the lack of availability of petrols. This is expected to change fast as many automakers are introducing petrol engines on SUVs as well. More stringent actions are needed by government and courts to curb sale of Diesel SUVs, which cause 25-65 times more pollution than petrol small cars.

Sources:

  1. Article published in TOI dated Jan 3, 2018. Click here
 [icegram campaigns=”1813″]
SHARING IS CARING, DO IT NOW!

Leave a Reply

Your email address will not be published. Required fields are marked *