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-   -   CARE report of Indian passenger vehicle industry (https://www.team-bhp.com/forum/indian-car-scene/130672-care-report-indian-passenger-vehicle-industry.html)

CARE research have come out with a report on the Indian passenger vehicle industry which is on the verge of another structural shift. According to CARE the first major shift came when the petrol prices were de regulated which is quite evident from the fact that the diesel cars have seen a sudden spurge in demand. This coupled with reduced price difference between the compact & midsize cars in sedan segment - again evident from many CS models launched by car manufacturers and many more inspired to do so in the coming days.

The second major strutural shift which is being witnessed is now with the launch of affordable mini UV's read the Quanto, Duster, Ertiga etc. Many more are to follow like Ford Ecosport, mini Aria etc.

I guess the next structural shift would the de-regularization of diesel prices. What say.

More details of the report in the attached PDF file.

weblink courtsey: http://www.moneycontrol.com/news/car...89.html#toptag

Interesting thing to note that the trio of XUV, Duster and Ertiga not only expanded the market but created new price points hitherto lying vacant.

I think the next big bang, apart from the SUV craze, will come from compact MPV's , something like the Renault Scenic or slightly stretched versions of Honda JAZZ like silhouette - essentially a 5-seater but with two rear jump seats for kids at a competitive price.

I've seen one instance where two kids were standing in the boot of a Wagon R with 5 adults seated in the regular seats. I guess it should't be too difficult for Maruti to actually put two small jump seats with lap belts for kids in Wagon R. :)

I would support any form of deregulated fuel and non subsidized stuff, for the betterment of our overall economy.
It's heartening to know that slowly but surely, the consensus for deregulation is building among citizens.
Deregularizing diesel may hit us hard in short term, but it will do a whole lot of good in long term.

I don't have a lot of knowledge in economic matters, hence I would request you to kindly explain how it would improve the economy if fuel prices are deregulated.

Is it like since we pay more, the government makes more money and therefore the economic scenario improves? If that were true, I am quite skeptical about the application of that money, with no marks for guessing how many more pockets would get filled. Apart from that, increasing fuel prices (which are already sky-rocketing) would only put additional pressure on a majority of the population right?

Again, I have very little knowledge in these matters, hence would happily accept if I have any misconceptions.

My thoughts on this-

We as a country import a lot of stuff, including fuel and the value of Rupee is a crucial factor whenever import/export comes into picture. With the sort of burden that the government is taking in giving subsidised diesel/LPG/kerosene, the lower than projected growth rate and the credit rating/market confidence that international agencies show on the Indian economy, the value of Rupee is definitely going to take a hit.

An example scenario: Since we pay in $$ while importing crude oil, if diesel now costs $1, which translates to Rs. 55 and the devaluation of Rupee leads to a situation where $1 equals Rs. 60, it is as good as a hike of Rs.5 from a diesel price point of view. If govt still tries to protect the common man from this hike, the value of our currency would take further hit due to increased subsidy burden and finally government would be forced to hike the price at some point. This is exactly what we tried to prevent but would happen eventually. In this case, all other things that costed $1 would also get a Rs.5 hike, which could be avoided if the devaluation of Rupee was prevented in the first place. One of the biggest financial burdens currently being called out is the fuel subsidy and hence any reduction in the burden would be perceived positively.

I guess there would be hundred such factors that would contribute to growth/decline of the economy. To me, its a question of taking hit on one thing right away or taking hit on several things simultaneously in the near future.

Happy to be corrected if I'm wrong. I'm no expert either :)