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Old 5th July 2016, 18:06   #1
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Default Diesel car sales cut by half! Now only 26% market-share

The Indian automotive market is clearly showing an inclination towards petrol-powered cars, especially after the infamous diesel-car ban in Delhi-NCR. As a matter of fact, number of diesel cars sold has dropped to 26% of the total sales, while the same was 52% in 2012.

The main reason behind this shift in customer preferences has been the recent debate on the diesel car ban. Supreme Court has enforced a ban in Delhi and the NCR that has stopped sales of diesel cars having engines bigger than 2,000 cc. This ban has not only affected bigger cars in Delhi, but has marked its impact throughout the country. People have become apprehensive about the ban being extended to lower capacity cars as well, and the National Green Tribunal's plans to enforce similar bans in more cities has further de-motivated customers from putting their money on diesel cars.

Additionally, the price difference between petrol and diesel has been narrowing every fortnight. Whenever a fuel price increase is made, diesel suffers a larger hike than petrol, while when a price deduction has to be executed, the drop is larger for petrol than diesel. As a result, while the difference between diesel and petrol prices in 2012 was around Rs. 27, it has now reduced to just Rs. 10. This narrowing fuel price gap means that it takes longer to recover the extra cost one pays for buying a diesel car. And since people in cities are now replacing cars in every four to five years, they have run out of a reason to put the extra money in a diesel car.

Industry experts suggest that this petrol-inclined buying trend will be staying here for quite some time. As a result, various manufacturers have started introducing petrol models of their cars, even in the full-size SUV and luxury sedan segment.

Source: ET Auto
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Old 5th July 2016, 18:15   #2
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Default re: Diesel car sales cut by half! Now only 26% market-share

I think in addition to diesel ban, ever growing OTR price gap between petrol and diesel variants and diminishing price gap between petrol and diesel fuel prices are also the factors to decline of sales.

When I was in market for car purchase, I started out with diesel for better torque and higher mileage. But on closer look at finance part, it seemed that we pay such a premium for diesel cars like increased ex-showroom price, higher RTO taxes, insurance etc. Also if one is taking car loan, then paying interest for these premium prices will further affect the break even for diesel car purchase. People have started to realize this and are taking decisions consciously.

Just my 2 cents.
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Old 5th July 2016, 21:33   #3
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Default re: Diesel car sales cut by half! Now only 26% market-share

I really feel that as long as crude oil prices are what they are right now, we may see this kind of a "petrol is back" euphoria. But the moment crude goes up, which it will in some time, with rising petrol and diesel prices, diesel may once again get back some kind of protection from the govt to reign in that inflation and we could once again see that preference towards diesel. So I think this is just a temporary thing that may last a year or two till crude levels are low.
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Old 5th July 2016, 23:13   #4
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Default re: Diesel car sales cut by half! Now only 26% market-share

Quote:
Originally Posted by SPARKled View Post
I really feel that as long as crude oil prices are what they are right now, we may see this kind of a "petrol is back" euphoria. But the moment crude goes up, which it will in some time, with rising petrol and diesel prices, diesel may once again get back some kind of protection from the govt to reign in that inflation and we could once again see that preference towards diesel. So I think this is just a temporary thing that may last a year or two till crude levels are low.
The million dollar question is when will crude go up. If it stays at the current level for a couple of years I expect the new developments in the Gasoline arena. A petrol head by heart, I would expect a slew of Turbo Petrol engines with Direct injection.
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Old 6th July 2016, 10:27   #5
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Default Re: Diesel car sales cut by half! Now only 26% market-share

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Originally Posted by SPARKled View Post
So I think this is just a temporary thing that may last a year or two till crude levels are low.
Well they should last while crude prices are low, not till then. If crude prices go up to a 100$ a barrel or more, then too we might not go back to previous petrol-diesel sales ratios because the people now see diesels as slightly risky.

My relatives in Delhi wanted to buy a small hatch, and their monthly running warrants a diesel. They can afford one, but they are not considering diesel because of the uncertainty around what the government will ban next.

I assume that the government cannot retrospectively apply green tax and small 1.5L and below diesels will be the last impacted, but the worry is still there and affecting sales.

Quote:
Originally Posted by 1.2TSI7DSG View Post
The million dollar question is when will crude go up.
I read recently that the exponential increase in efficiency of both petrol and diesel engines, hybrids and all electric vehicles has resulted in OPEC having to reduce output in order to sustain even current oil prices. There are also significant reserves (untapped or just started) of oil with Russia and the US both of whom are hoarding.

All of this has resulted in predictions now of oil lasting another 100 years at least, from the 20 years it was supposed to last 10 years ago. I don't think crude prices are going up to 100$ plus levels in the near future, unless artificially propped up by supply restrictions.

All the better for members of this community. Go green! (Leave more for us).
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Old 6th July 2016, 14:34   #6
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Default Re: Diesel car sales cut by half! Now only 26% market-share

The government seems to be openly encouraging the buyers towards petrol powered vehicles. But it has been extremely reluctant to pass on the benefits through reduced taxation and surcharge. They need to bring down the price of petrol below diesel which will surely reduce the market share of diesel vehicles even more (except for SUV and MPV market).
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Old 6th July 2016, 17:07   #7
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Default Re: Diesel car sales cut by half! Now only 26% market-share

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Originally Posted by VeluM View Post
....
I read recently that the exponential increase in efficiency of both petrol and diesel engines, hybrids and all electric vehicles has resulted in OPEC having to reduce output in order to sustain even current oil prices. There are also significant reserves (untapped or just started) of oil with Russia and the US both of whom are hoarding......
Well, not really. Efficiency has increased over decades, but would have been offset by the rise in sheer volume of vehicles. Besides, vehicular consumption is just one aspect. This dip was likely caused by many other factors, some not even in public domain. (For instance, consider how badly Venezuela and Russia have been hit. This might not just be a happy coincidence for US.)

The sad reality is that despite making tall claims of de-regulation of fuel prices in India, the same has been controlled through stealth via VAT charges. Once the prices start going up, VAT would be decreased more sharply for Diesel thus increasing the difference again. While appreciation in prices is beyond control and understandable, the price difference should be kept consistent in order for emerging technologies and solutions to emerge. So the jury is still out on petrol vehicles being preferred.
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Old 6th July 2016, 17:40   #8
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Default Re: Diesel car sales cut by half! Now only 26% market-share

Just did a little math. The current option price (difference between same Petrol/Diesel variant) which a customer pays for Swift / Grand i10 level model is about 90~100k.

Assuming FE of Petrol vehicle @ 13 km/L & Diesel @ 17km/L
Current Fuel Prices (Delhi) Diesel: Rs 54.7 & Petrol: Rs 64.6

Running cost Diesel = Rs 3.20/ km
Running cost Petrol = Rs 4.96
Net Diff= Rs 1.76

Now to recover the additional 100K paid for Diesel car, an owner needs to run ~57k kms ( approx 3.7 years with 15k running per year under normal usage). So makes little sense for people to buy diesel unless the running is really high.

Plus if we see the Govt. actions are also towards reducing the Diesel vehicles in the country. Issues like >2L Diesel engine ban or additional green tax on Diesel vehicles of 10~25% (still under consideration).

Plus the hue & cry by NGT stating the high level of pollution being caused by Diesel vehicles. While Diesel has increased from 44/L in Aug'15 to 54/L in July'16, Petrol has only increased marginally by 1~2Rs / L (63/L in Aug'15 to 64/L July'16).

Also not to forget from 20.4 the option prices will shoot by another 50k (net option price paid=Rs 1.5L). Last but not the least, Petrol owners have an option to switch to CNG while Diesel customers do not.

Last edited by GTO : 6th July 2016 at 22:49. Reason: Formatting, language errors, using unnecessary short-forms
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Old 6th July 2016, 19:10   #9
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Default Re: Diesel car sales cut by half! Now only 26% market-share

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Originally Posted by FIAT3031 View Post
Now to recover the additional 100K paid for DSL car an owner needs to run
~57k kms ( approx 3.7 years with 15k running per year under normal usage)
Fact check: cabs runs much, much higher than that. Every cab that I've sat in, has clocked an average of 60-70k kms in a year.

So, for that segment, the price differential (however minuscule), *really* add up.

There'll also be the difference in cost of maintenance; I haven't owned a diesel vehicle so I'm not aware of the specific figure though.
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Old 6th July 2016, 20:10   #10
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Default

Quote:
Originally Posted by SPARKled View Post
I really feel that as long as crude oil prices are what they are right now, we may see this kind of a "petrol is back" euphoria. But the moment crude goes up, which it will in some time, with rising petrol and diesel prices, diesel may once again get back some kind of protection from the govt to reign in that inflation and we could once again see that preference towards diesel. So I think this is just a temporary thing that may last a year or two till crude levels are low.






Quote:
Originally Posted by VeluM View Post


I read recently that the exponential increase in efficiency of both petrol and diesel engines, hybrids and all electric vehicles has resulted in OPEC having to reduce output in order to sustain even current oil prices. There are also significant reserves (untapped or just started) of oil with Russia and the US both of whom are hoarding.

All of this has resulted in predictions now of oil lasting another 100 years at least, from the 20 years it was supposed to last 10 years ago. I don't think crude prices are going up to 100$ plus levels in the near future, unless artificially propped up by supply restrictions.

All the better for members of this community. Go green! (Leave more for us).
Oil isn't peaking anytime soon. Because the minute it goes beyond a threshold level, OPEC risks bringing US shale producers back in business. It's the reason why OPEC hasn't cut production despite low prices.

The recent blip in prices was more because of supply disruptions in Canada and Nigeria.
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Old 6th July 2016, 21:24   #11
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Default Re: Diesel car sales cut by half! Now only 26% market-share

A minor factor for this is the increase in the sales of Automatics. There are far more petrol automatic options compared to diesel ones. And the demand for automatics has shot through the roof in the past 2 years.

Except Zest (and the recently launched Dzire), there are no diesel automatics under INR 10 lakhs. (Considering 10 lakhs as this segment sells the most volume)
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Old 7th July 2016, 08:59   #12
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Default A quick calculation: Baleno Petrol Vs Baleno Diesel

One of my friend has booked a Baleno Diesel and is waiting for the delivery since February and NEXA informed him that it may take another 2-3 months. However yesterday they called him and updated that they can deliver a petrol variant much earlier. So, he asked me for suggestion.

A quick calculation and we found that he is a clear candidate for a Petrol.

His expected usage per month: 1000Kms (70-80% usage on highway), but in the below calculation we considered 1500 Kms.
He plans to keep this car for max 3-4 years

So, expected total usage for 4 years is 1500 Kms * 48 Months = 72000 Kms

Baleno Petrol:

Average Fuel Efficiency: 16 (indicative)
72000/16 = 4500 Litres of Petrol
Total Expense on Fuel: 4500 * 69 = 3,10,500

Baleno Diesel:

Average Fuel Efficiency: 20
72000/20 = 3600 Litres of Diesel
Total Expense on Fuel: 3600 * 58 = 2,08,800

Savings on Fuel (Diesel): 3,10,500(Petrol) - 2,08,800(Diesel) = 1,01,700

So, after 4 years the savings for a diesel car based on the fuel expense is 1,01,700. But initially you have to pay 1.4L more for a diesel car. So, to reach the break even point, it takes at least 6 years based on his usage. This will go up further, if you consider the additional interest/EMI for the extra 1.4L and the maintenance charges.

After this calculation he was super happy to confirm the petrol car. So, still there are people who are blindly picking a diesel car thinking they are going to save on fuel.

This is just a indicative calculation with approx figures. Even if there is increase in petrol price or decrease in diesel price, its not going to make a big difference.

Note: The interest amount for the difference amount of 1.4L is coming to 30K for a 4 year duration.

Last edited by ampere : 7th July 2016 at 13:06. Reason: Content added as suggested
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Old 7th July 2016, 09:21   #13
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So, after 4 years the savings for a diesel car based on the fuel expense is 1,01,700. But initially you have to pay 1.4L more for a diesel car. So, to reach the break even point, it takes at least 6 years based on his usage. This will go up further, if you consider the additional interest/EMI for the extra 1.4L and the maintenance charges.

After this calculation he was super happy to confirm the petrol car. So, still there are people who are blindly picking a diesel car thinking they are going to save on fuel.

This is just a indicative calculation with approx figures. Even if there is increase in petrol price or decrease in diesel price, its not going to make a big difference.
You also need to take the resale value in your calculation. A diesel would definitely be sold around 80-90k above the petrol version.
I am telling this 80-90k figure by comparing same version ,same manufacturing months but different fuel ,swifts on a reputed website like carwale.com
If he opted for diesel then spirited drives on highways would give him around 20 while the same driving style in petrol would give him around 15-16.
If he drives sedately then petrol would give him 18kmpl around and diesel would give 23-24 kmpl around.
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Old 7th July 2016, 09:26   #14
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Default Re: Diesel car sales cut by half! Now only 26% market-share

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You also need to take the resale value in your calculation. A diesel would definitely be sold around 80-90k above the petrol version.
+1. Also these calculations change according to the vehicle in question. For C segment and cars and above the difference is more glaring since the FE of the petrol motors in these cars is considerably less than their diesel counterparts.
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Old 7th July 2016, 09:34   #15
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Default Re: Diesel car sales cut by half! Now only 26% market-share

There are multiple reasons to move back to petrol for Delhi/NCR folks atleast:

1. Ban on 2000+ CC diesel vehicles.
2. Diesel cars can be driven in NCR only upto 10 years old, while the same limit is 15 years for Petrol.
3. Heavy price drop on resale value for diesel cars post 5+ years of ownership, due to point #2.
4. Bridged gap between Diesel and Petrol, difference is <Rs.10/L
5. Price difference between Petrol and Diesel models in the same trim are increasing. When we bought the Creta the 1.6 Petrol and 1.6 Diesel with SX+ trim were close to 2.15 Lakhs apart!
6. Added cost due to high maintenance cost of diesel cars.
7. Ease of use/driving, for manual car owners bumper to bumper traffic is literally a pain in the knee, especially diesel cars.
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