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Narrow Price Gap Between Petrol and Diesel, Fuels Higher Sales of Petrol Cars

Petrol prices

At one time diesel cars were gaining in popularity but sales have received a setback in recent times. One of the most important reasons is that the price gap between diesel and petrol has narrowed down. Ergo, petrol cars are back in the lead. Automakers who had decided to focus on diesel variants are now rethinking marketing and production strategies. Subsidy on diesel is being withdrawn steadily and the day is not far off when the price difference will be marginal. As of today diesel is 14% more expensive than it was a year before and petrol prices have not skyrocketed as expected.

Customers in India have always been price conscious and concerned about mileage as well as fuel costs. Diesel cars were growing in popularity because of the disparity in petrol and diesel prices as can be seen from the example of Honda. Its diesel Amaze variants were in high demand in 2013 but today customers prefer petrol models. It is the same story with its City model. The ensuing festival season should see a spike in demand for petrol cars that have inherent lower maintenance costs and are more environment friendly. Maruti has seen the writing on the wall and has put on hold its plans for a new diesel unit at Gurgaon. Customers have shown more interest in petrol cars with sales jumping to 11% even as sales of diesel variants have declined by 7%.

As matters stand, diesel variants carry a higher price tag with the difference being almost Rs. 1 lakh. Cost of ownership is high and this coupled with higher maintenance is a damper. Now that diesel fuel prices are no longer that attractive enough to warrant shelving out a higher amount, petrol cars are making an aggressive comeback with manufacturers changing production schedules to meet expected demand. Hyundai is a case in point, with a manufacturing line dedicated to producing hybrid, petrol and diesel engines from the same unit to address a fluid market situation. Government policy changes too have contributed to the shift in customer preferences.