Petrol deregulation likely to hit car sales
The deregulation of petrol pricing announced on Friday is likely to have an impact on car sales in the short term. But diesel vehicle makers stand to benefit for the time being as a decision on diesel price deregulation is yet to be taken.
The government announced a hike of Rs 3.50 per litre for petrol and Rs 2 for diesel. The widening gap between petrol and diesel is likely to bring about a more marked shift in consumer preference for diesel cars.
It’s a double whammy for vehicle buyers as most automakers intend to increase vehicle prices during July due to rising input costs. Car prices have already gone up by 5-7 per cent in three phases so far this year.
“The auto industry has always welcomed the freeing of fuel prices. This will increase running costs but we have to live with it,” president Society of Indian Automobile Manufacturers (SIAM) and president-automotive, Mahindra & Mahindra, Pawan Goenka, said.
“The immediate increase in petrol and diesel prices will definitely impact car sales in the short term. If the gap between petrol and diesel prices keeps increasing, it will benefit diesel vehicle makers like us,” deputy managing director-marketing of Toyota Kirloskar Motor Sandeep Singh said. Toyota sells diesel models in its entire vehicle range except the Corolla Altis.
“There will be a negative impact on sales in the short term due to deregulation of petrol, but this is expected to stabilise in the long term,” vice-president corporate affairs of General Motors India P Balendran said. Chevrolet cars upwards of the Optra Magnum including Cruze sedan and Captiva SUV also come in diesel variants.
“When international fuel prices are low, India will benefit from lower fuel prices. This may not impact car sales much. Maybe people who are looking to buy a higher variant would now buy a lower-end variant, especially with another anticipated car price rise,” head research, Geojit BNP Paribas Financial Services, Mr Alex Mathews said.
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