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Old 28th May 2011, 20:46   #1
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Default How will the market change if Petrol and Diesel prices sky-rocket

Have you thought how market will be if Petrol touches Rs 100/ltr and deregualted diesel prices and Diesel cost around Rs 60-70/ltrs

I was today thinking how much the prices of Petrol and Diesel are changing the dynamics of car sales in India.

Imagine this Alto sales are not just because of its model characters, one main reason is the fuel economy it has in offer. Likewise, cars like Vento and Figo have the Diesel engine to credit to its monumental sales figures.

That being the case, have you ever thought how market will be if Petrol touches Rs 100/ltr and additionally government deregultes the diesel prices and Diesel cost aroun Rs 60-70/ltrs.

Petrol touching Rs 100/ltr
One cant deny that its not possible. The petrol prices have been ever increasing with the govt turning out to be mere spectators, I would not be shocked it the petrol reaches Rs 85 by year end. And Rs 100 by around Aug 2012.

Diesel touching Rs 70/ltr and deregulated
Diesel is one hard pill that Indian govt is managing to be digest all this while, talks have been for a long time. But it wont be long that Diesel might be deregulated some day and it might touch Rs 60/ltr by year end and around Rs 70/ltr during Aug 2012.

Both are a hypothetical situation (though on cant deny chances of them happening).

How will market change
From here one its purely speculation. I would like to know your thoughts on how market would change if both things occur.
Needless to say, cars with good economy will sell more. But what I am thinking is indian middle class might even shun buying cars itself.

We might have a repeat of the 80s where the cars might become a rich mans thing and the roads might turn out to be empty. And it will be the ages of motorcyle again.

What are your thoughts on how India will look like if the prices of fuel shoot up like I mentioned...

Last edited by xingamazon : 28th May 2011 at 20:47.
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Old 28th May 2011, 20:50   #2
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Default re: How will the market change if Petrol and Diesel prices sky-rocket

I think its not going to affect the middle class a lot and will not at all affect the rich. The middle class will factor in the hike into their budget by slashing on visits to the mall, movies, ice-cream etc.

People might get inventive, like start car pooling and walking short distances, don't see any major change though.

Taking this argument one step further, I feel petol prices have been manipulated by OPEC and have been kept high purposely.

Wish the electric brigade comes out with better and cheaper products and puts us out of our misery
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Old 28th May 2011, 20:55   #3
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Default re: How will the market change if Petrol and Diesel prices sky-rocket

It's high time India should get hybrid cars. The Govt. should subsidize the rates of such cars and manufacturers should locally produce them. A hybrid car would not cost too much over a petrol one. In the US, almost all manufacturers have 3-4 hybrid cars in their stable.
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Old 28th May 2011, 21:16   #4
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Default re: How will the market change if Petrol and Diesel prices sky-rocket

Quote:
Originally Posted by xingamazon View Post
...


Needless to say, cars with good economy will sell more. But what I am thinking is indian middle class might even shun buying cars itself.
...
wouldn't that be great ?!

However if the prices do shoot up that much, a lot of really nasty things will also happen - transport is a significant sector of the economy and energy prices effect everything.


Quote:
Originally Posted by xingamazon View Post
... And it will be the ages of motorcyle again.

...
And here you spoil all the fun
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Old 28th May 2011, 21:17   #5
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Default re: How will the market change if Petrol and Diesel prices sky-rocket

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Originally Posted by xingamazon View Post
have you ever thought how market will be if Petrol touches Rs 100/ltr and additionally government deregultes the diesel prices and Diesel cost around Rs 60-70/ltrs.
During the height of recession (middle of 08 to middle of 09) the parking lots around our office used to be empty. Not that everybody lost jobs (many did, and I had to nurse some close friends who did, worst moments of my professional life, but thats OT) but they started car pooling, riding bikes etc.

If fuel prices touch the levels we are discussing, I feel we might see fewer cars on road and parking lots. Mall might be emptier.

In the short run, such prices cannot be ruled out, on the long run I have a different opinion, but thats again OT! We discussed these aspects in @DeltaWing's petrol diesel cost comparo thread recently.
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Old 28th May 2011, 21:31   #6
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Default re: How will the market change if Petrol and Diesel prices sky-rocket

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Originally Posted by TheARUN View Post

Taking this argument one step further, I feel petol prices have been manipulated by OPEC and have been kept high purposely.
I thought that demand supply factor was the most important in determining prices. Can you please explain?


I think even if petrol and diesel prices reach such astronomical prices we will still see people buying cars and driving them. I think they will cut down a little but then they will still drive to work.

You still need to take into consideration the increase in salary and earnings. I assume that they will not be parallel to the increase in fuel prices but still they will buy and drive.
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Old 28th May 2011, 23:11   #7
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Smile re: How will the market change if Petrol and Diesel prices sky-rocket

I agree. People would drive to work even if prices touch 100 for petrol. However I believe due importance would also be given to Public Transport. I am exploring ways to get to my office via public transport, a distance of 7 km one way, which would become very expensive with petrol touching 100.

I feel that with raising prices we are going to think at least once before burning valuable fossil fuels.

Meanwhile, I think in Bangalore with Petrol prices at 71+ people have started driving slow, within range for efficiency. There are no unnecessary accelerations visible in my daily commute. I just hope thats true. I myself drive for maximum FE.
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Old 29th May 2011, 00:51   #8
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Default re: How will the market change if Petrol and Diesel prices sky-rocket

@Mr Beat, the prices of petrol has gone up from Rs 50 during July to now Rs 72 in Chennai which is almost 50% increase, I really wish my salary increase was that high.

@Vivek.ks I understand your point when you say that people will continue commuting in vehicles even if the price reaches INR 100. But I am guessin that might not be the fully true. There has to be some cut off point even if Rs 100 is not the cut off, people will give it a rethink if it goes up to say 120.
The point I was driving is, how you think the car market will look like if that happens and also how you think roads will look like.
One good point you made is reliance on public transport will increase which I agree is true. A retroish return back to the past aint it??

Think of how this scenario will affect the new car market. Imagine people like us will drive our car cos of one reason that we have already spent lakhs on a car and keeping it idol would mean wasting our investment, but for people who are planning to buy new car, for them cars might not be making sense any more at all..

Last edited by xingamazon : 29th May 2011 at 00:54.
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Old 29th May 2011, 01:47   #9
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Default re: How will the market change if Petrol and Diesel prices sky-rocket

Quote:
Originally Posted by xingamazon View Post

@Vivek.ks There has to be some cut off point even if Rs 100 is not the cut off, people will give it a rethink if it goes up to say 120....
l..
I agree there is a threshold for everyone, it depends on your disposable income. I have seen in my neighborhood people car pooling even for dropping of their kids to school. a sound way to save money.
Moreover there is an exponential rise of passengers commuting in delhi metro, i guess a part of it would be due to rising petrol prices also, people park their car and use metro.
Then there are CNG, LPG, Electric variants of car (necessity is the mother of all inventions )

but with rising income and efficiencies of engines i see this threshold far beyond rs 100 for an average middle class owner of a 4 wheeler.
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Old 29th May 2011, 01:54   #10
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Default re: How will the market change if Petrol and Diesel prices sky-rocket

In my opinion it would not make much difference because people are accustomed to a certain lifestyle and leaving that would require a serious shock of say like straight jump to 130 or something.
But that would just trigger the sales for CNG cars. The que at the CNG pumps will double and the cng pumps will also double. The compartments in the metro will increase to 8 compartments per engine (talking about Delhi) and you would see the lala's of chandni chowk riding in the metro fighting for a space to sit..lolz

but honestly by that time we are going to figure out something or the other to put in our cars like there is already a lot of research going on about bio-diesel and it is being used as well. there is a great thread about that on T-BHP.

Think of it this way, before there were petrol cars no one could even think of such things but still Karl Benz came up with it and now look where it has reached. So, i believe someone will come up with something which will make things easier. best example for this is jaguar C-X75. i am sure its expensive now but future is uncertain.. cheers.
link:
The Amazing Jaguar C-X75 Concept Hybrid uses gas turbines rather than a piston engine to recharge batteries – The Blogs at HowStuffWorks
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Old 29th May 2011, 03:05   #11
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Default re: How will the market change if Petrol and Diesel prices sky-rocket

Quote:
Originally Posted by xingamazon View Post
@Mr Beat, the prices of petrol has gone up from Rs 50 during July to now Rs 72 in Chennai which is almost 50% increase,
Rs. 72???!

It was 67.2x when I filled a couple of days back (I was not filling Petrol ) - was there another hike???

But between you and me - get a Diesel car, you will be fine, and the prices wont cross 50 bucks for a long time to come!!!
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Old 29th May 2011, 07:55   #12
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Default re: How will the market change if Petrol and Diesel prices sky-rocket

Already in car pooling mode for with 2 folks, if this happens might include a third one in the group. Slightly a pain as to matching office timings with three (where 2 is a challenge).

If i was alone and no car pool option available, maybe move to 2 days using Volvo to office is also a brilliant option.
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Old 29th May 2011, 08:17   #13
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IMHO, many of us will switch to car pooling or more bike usage for regular commutes.
However, I think eating out is more expensive and it's easier to save moneyby cutting down on that thanby cutting down on fuel. How many of us actually do that is another topic. After all 65 bucks for a dosa, give me a break
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Old 29th May 2011, 08:44   #14
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Default re: How will the market change if Petrol and Diesel prices sky-rocket

I drive a relative gas guzzler. I have managed to reduce my fuel consumption by 10% by:

1: Early morning - walk to the gym 1.5 km - eliminates cold starts, to the gym and back
It costs me in terms of time, I cannot read the paper like I used to

2: Commute - I now drive halfway, leave my car in one office and take a shuttle to the office.

3: Weekends - I use the swift unless absolutely necessary. RS used for long smooth runs

4: Idling - I switch off regularly at junctions
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Old 29th May 2011, 08:46   #15
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Default re: How will the market change if Petrol and Diesel prices sky-rocket

Life will continue as usual no matter what is the cost of petroleum products, just like people are buying gold irrespective of its price.

Cost of living and inflation will also go high along with the cost of petroleum products.

USA's hegemony will spread to more oil-rich nations.

Alternatives will emerge at affordable costs.

Last edited by J.Ravi : 29th May 2011 at 08:51.
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