[RavenAvi]

An interesting article I came across in Dance With Shadows.

Every time there’s a hike in petrol prices a few hundred cars die somewhere. Petrol cars could rapidly go out of favor, as is evident by falling sales figures of petrol-only models among all car makers.

We decided to dig deeper into the sales chart of petrol cars in the past 6 months. What surprised us is that the decline in petrol cars is across the board – right up to premium and luxury sedans. (The trend is not very marked in cars less than Rs 5 lakh because there are very few good diesel engine choices in that price range.)

Are we seeing the beginning of the end of petrol cars? That is perhaps too extreme a conclusion. But what is definitely true is that for some petrol cars, this looks like the end of the road.

Take sales of the Honda Accord for instance. Only 933 Accords have been sold in the period from January to June 2011, with sales declining 135% from 242 cars in February to 103 cars in June.

The Accord is a good, sporty luxurious car, priced between Rs. 20 lakh and Rs. 26 lakh, with a choice of two petrol engines. But if you look at its immediate rivals, the Skoda Superb and the Volkswagen Passat (the new Passat was launched in April), which have good diesel engines, the sales charts show a different trend. Skoda sold 2,078 Superbs between January and June, with a consistent monthly average of 347 cars. Volkswagen has managed to sell 577 Passats in three months, at an average of 193 cars a month (almost double the Accord sales).

A little further down the price ladder, the story is as dismal for the newly launched Kizashi. The Maruti Kizashi, which is being sold in India as a fully-imported completely-built unit (CBU), sold 245 cars from February to June, with most number of cars (103) being sold in March during the initial launch hype. In June, there were only 32 cars buyers of the Kizashi.

Petrol SUVs are also struggling to maintain even a token presence. The Mitsubishi Outlander and Honda CR-V are two petrol-only SUVs competing with diesel giants such as the Ford Endeavour and Toyota Fortuner.

In the past 6 months, the Honda CR-V has sold 30 units a month on an average.

The Outlander averaged 58 units, with June sales dropping down to 41. (Consider the 900-plus units sold for the diesel Fortuner).

Maruti’s Grand Vitara is virtually over. In the last 6 months, this petrol-only SUV has found only 31 buyers! This is despite the fact that the Vitara comes with all the trappings and features of a good SUV, and is priced much lower than its competitors.

Established brands are finding it hard to hold on to loyal customers for their petrol-only cars. Honda has been the worst hit, as it doesn’t have a single diesel engine offering till date, with the earliest launch of diesel engine from Honda being in 2014. Honda has seen sales fall in all segments. Sales of the popular Honda Civic are down to just 175 cars in June from 508 in January.

All other cars in this price segment have diesel engine choices and are doing well. The Skoda Laura sells an average 586 cars a month, with sales rising to 693 cars in June. The Toyota Altis, which sells both petrol and diesel models, sells an average of 694 cars a month.

The leader by far is the Chevrolet Cruze, which is a diesel-only model in three variants, having sold 4,773 cars since January, at an average of 795 cars a month. General Motors is very happy with the sales of the diesel Cruze and has ruled out bringing in the petrol version of the Cruze to India, as it does not see any demand for that model.

A segment lower, the Honda City got hammered in sales by the Hyundai Verna, Volkswagen Vento and Maruti SX4 in April and May due to the lack of a diesel engine. But Honda made a sort of a comeback with a whopping price cut of Rs. 66,000 on its base version, which has seen sales jump back to 2,802 vehicles in June from 1,828 a month earlier. But it’s still nowhere near the 4,460 cars a month average it sold from September to December last year. Honda City’s average sales from March to June were just 2,230 cars.

There are some good cars that face a serious threat today because of the petrol-diesel fuel cost difference. Their entire proposition has been seriously dented by this fuel cost disparity. Don’t be surprised if these models completely disappear from the buyer’s shortlist in the next 6 months, especially if their makers do not reinvent them around diesel engines.

SOURCE (and Thanks to) - Petrol premium, mid-size and SUV car sales in India till June 2011 see big drop | DWS Auto India

[ani_meher]

Thanks for sharing the article RavenAvi. And I think you are looking for petrol Jazz!

As for the article: Why? I calculated for Ritz when I was considering it, that there is about 1L difference in Petrol and diesel. Diesel cost: 48Rs, mileage: 18; Petrol cost: 68Rs, Mileage: 13 (pretty conservative for both).

Diesel cost per km: 48/18 = 2.67
Petrol cost per km: 68/13 = 5.23
Difference = 2.56

To cover up my 1L additional spend, I have to drive 39 thousand kilometers to break even! Sure diesel fetches more in resale, but then a common perception says that diesel costs more to maintain, alongwith more frequent change in consumables like oil filter. Also, I have heard that diesel engines are good for frequent run, but using them only for weekend long rides is not a good idea. Whereas in Petrol, infrequent use doesn't cause as much problem.

While the analysis is good, I don't think petrol vehicles are going to die anytime soon. If the insurance companies have their way of charging more to diesels, then this would add additionally to the cost of ownership.

EDIT: For premium, mid-size and SUV, well, the article may hold water, as these are presumably high use vehicles.

[clevermax]

Originally Posted by ani_meher

To cover up my 1L additional spend, I have to drive 39 thousand kilometers to break even!

I don't believe in this break even theory at all.

Fact is very simple - if you have a diesel car, you WILL drive it more than a petrol car. The point is, you can't just fix your daily / monthly driving limits and then decide on the fuel variant of a car. I am driving a petrol as well as a diesel, and whenever I have the diesel car, I just don't care about the distance I have to go, I just drive. But when I have the petrol car at hand, I will surely think about other alternatives for a long journey.

To answer the thread's main question, yes I too think that it is the beginning of the end for petrol cars.

[ghodlur]

Although it cannot be said that its the end of petrol car yes but definitely the sales have dropped for the sedan, SUV and the high end petrol cars atleast. The car manufacturers are putting it on the planning boards to make the petrol cars more fuel efficient and envoirnmental frendly. The diesel cars presently have an advantage of lower fuel price but the day is not far when the govt thinks of de regularizing the diesel and this would bring the fuel prices at par with the petrol. That day the petrol cars will again start outselling the diesel ones (I hope).

[asr245]

Well, I hope not! I love my petrol cars and would love to have as good a choice I have today in the the future. Yes, running costs are probably twice (or more) in a petrol but nothing beats the low NVH and smoothness of a petrol engine.

Before it turns into a petrol Vs diesel war, I would like to state that the only diesel car I have driven ( for a few hundred kms mostly in hilly region) is was father-n-law's Dzire Vdi. The higher NVH & vibrations of that gave me a headache (not speaking figuratively) while driving a petrol car on the same route (in a Matiz) & a few hundred kms in HP hills wasn't a problem (in my City). Maybe I am more sensitive to that + love the music a petrol makes above 3K rpms.

That said, I wouldn't think of buying a petrol SUV unless I become super-rich.

[maheshramaling]

While this analysis is good but this is for a short timeframe and even in this if you see the sales of diesel cars/ suv's have come down between months. We need to compare the volume of sales YoY basis only on Petrol vehicles. The other fact is that we started seeing more diesel car/ suv options only in the last decade - till then it was dominated by Petrol cars (read maruti or hyundai). So naturally - there will be a shift. It's like hardwired landlines Vs mobile phones!!

Even if the analysis on YoY is showing decline; seeing the trend like companies reducing base price or offer more discounts & interest rate being reduced for petrol cars - guess the scene could be very different. Other thing to be kept in mind that Diesel prices will surely go up since the loss is very high for oil companies.

So - in my opinion, petrol cars will not die & this lesser sales figure is not the road to their death!

[phamilyman]

This is called economics and ONE TIGHT SLAP in the face of Indian fuel taxation regime.

The government (headed by a world class economist, no less) should have known that by distorting market incentives, they will achieve absolutely NOTHING. That the market will innovate while the babus are sleeping.

The time is ripe to rationalize the taxation regime and bring things on par. There is no sensible reason to keep prices the way they are.

The tax revenues from petrol will anyways disappear - so might as well bring it to the same taxation/pricing as diesel and let sanity prevail. There's a reason that petrol/diesel prices are not far from each other in developed western economies.

[RS_DEL]

Originally Posted by phamilyman

This is called economics and ONE TIGHT SLAP in the face of Indian fuel taxation regime.

The government (headed by a world class economist, no less) prevail. There's a reason that petrol/diesel prices are not far from each other in developed western economies.

I could not have put it better.

However given that what you are is saying is rational and logical, I doubt very much it will happen.

Strange is it not that the brightest of the lot who join the central services end up devoting all their intellectual prowess in designing asinine rules and policies which only serve to enrich the babu/neta combine and their agents masquerading as businessmen. This is so even in today's India which is far better than the days when our PM as the then FM presented his budget in the cabinet of the late PVNR.

[hajaar]

For the amount of driving I do, the savings in cost of diesel over petrol do not justify the higher cost of a diesel version. I am not even including things like brand, vibration, noise, driveability etc.

[amitoj]

Taking trends from the past 6 months to pass a conclusion on something that has been around for decades is just bad maths.

And petrol SUVs never formed a big enough portion of petrol cars sold, so using their example is also not correct.

[v.anand]

There is no doubt diesel prices are going to get regularised for general public in the near future, possibly not later than the next budget itself. Petrol prices may dip a bit and diesels are going to go up for certain.

When we were looking for a new car purchase recently, the choice was between Polo 1.6 petrol and 1.2 TDI diesel. The diesel was noisy, unrefined, vibrating, less power and huge turbo lag apart from a difference of Rs.80K approx. There was no doubt petrol was a better car overall and the initial cost calculation itself gave an approx advantage of 15,000 kms at present petrol prices to match the diesel car prices. Knowing our usage, we were to reach there in 2 years time and hence went in for the petrol. Keeping this in mind, I really don't think its the end of days for petrol cars.

Also, globally Europe sells more diesels than petrol but in US and Japan diesels are nearly non-existant considering them to be the top selling markets. Its a long way to go before diesel cars even reach the level of petrol ones in terms of numbers, hence IMO its premature to call it the beginning of the end of petrol cars.

[Santoshbhat]

Originally Posted by clevermax

I don't believe in this break even theory at all.

Fact is very simple - if you have a diesel car, you WILL drive it more than a petrol car. The point is, you can't just fix your daily / monthly driving limits and then decide on the fuel variant of a car. I am driving a petrol as well as a diesel, and whenever I have the diesel car, I just don't care about the distance I have to go, I just drive. But when I have the petrol car at hand, I will surely think about other alternatives for a long journey.

To answer the thread's main question, yes I too think that it is the beginning of the end for petrol cars.

I don't believe in this 'will drive more if I have a diesel car' theory! While buying any car a buyer will have a rough idea of how much running he is going to do in a month. We all know that for the same model, the diesel version is costlier. If you are going to save on running cost with a diesel car then you are paying more for the capital cost of the car and also for the higher cost of consumables and spares. As pointed out, until the break even point, total amount spent by the petrol car owner and the diesel car owner is the same.

Do remember that the Govt. is subsidising diesel heavily. While diesel car owners may think that their out of pocket cost on diesel is lower, they (and other petrol car owners too!) are indirectly paying for this subsidy by way of taxes. This free ride may not last forever. If this is the beginning of the end petrol cars, then it is surely the beginning of the end of diesel subsidy.

[phamilyman]

Originally Posted by RS_DEL

I could not have put it better.

However given that what you are is saying is rational and logical, I doubt very much it will happen.

Strange is it not that the brightest of the lot who join the central services end up devoting all their intellectual prowess in designing asinine rules and policies which only serve to enrich the babu/neta combine and their agents masquerading as businessmen. This is so even in today's India which is far better than the days when our PM as the then FM presented his budget in the cabinet of the late PVNR.

I can drive a Accord v6 at 40kph in the 6th gear. That only proves that the best software/hardware is useless in the hands of someone who doesnt know/want to use it the right way.

Ditto about our bureaucrats'

@V.anand: Its an indian media site, creating a hype, for the indian audience - ignore the hyperbole in the title. The rest of the world marches to a clearly different tune!!!

[deep_bang]

I do believe that the end of Petrols has begun.

Of course, when i say the end, i mean to say that sales will decline gradually, over the next decade or so - not like they will just stop in the next 1 year.

WHY do i think so - moreover with the largest selling car as the Alto?

Because Diesel technologies are growing far faster than their petrol counterparts. It is very likely that in the coming decade too, a lot of investments will go towards diesel technologies making it more closer to petrol like NVH.

Today, diesel engines are more expensive, mostly because of their technologies (i dont think manufacturing costs would differ much although i agree that there are more mechanical parts in a diesel). However, today's technology will be cheaper tomorrow.

Diesel's prices will surely be regularised over time (what time ? no one knows, but surely not in the next 1 to 2 years.). The shift has to be gradual. The point is, even when diesel costs get on par with petrol, my thought is that diesel technology also would have grown substantially, probably with as good NVH as petrol, but with other advantages too - such as a better mileage, higher torque etc.

As an end note, i think we need to think what next after petrol and diesel as both would cross Rs 100 soon. Anyway - that is something for a wholly different thread.

[ACM]

Diesel cars are also more fuel effecient compared to similar capacity petrols.
Diesel is cheaper - but this could change in the long run, but this is not likely during the life of vehicles we buy today.
Diesel is getting more and more refined by the day - but not as much as petrols
Diesel car rev to higher RPMs today, but not as much as petrols.
Diesel cars no longer require higher maintenance, infact a few of the petrol power plants too use turbo chargers negating the extra maintenance that a turbo requires.
Diesel cars have inherently higher torque which makes for better city driving if the torque is available at low rpms.
Petrols are not gone as yet and neither petrol nor diesels will go any time soon, till electric cars or other alternative fuels take over from both of them.