[JayPrashanth]

The slowdown in car sales is having a telling effect on car makers across India. Market leader and industry bellwether Maruti Suzuki has been facing the brunt of the sales slowdown, so much so that the car maker has gone slow on production of diesel engines at its Manesar production facility. Maruti Suzuki has suspended the third shift at the diesel engine factory at Manesar, in what seems to be a move aimed at aligning rising inventory levels to the demand situation.



This production cut represents a third of the total production capacity, in a factory that is designed to output 300,000 Fiat 1.3 liter Multijet turbo diesel engines each year. The car maker is said to have instructed 200 contract workers to go on indefinite leave, owing to the production cut at the diesel engine factory. Maruti Suzuki has also cutback on car production at its Manesar and Gurgaon factories as car demand has been continually falling over the past few months.

The cutback on diesel engine production comes at a time when prices of diesel have been steadily inching upwards on account of the depreciating Indian rupee and the new governmental policy of partially deregulating diesel prices. The Indian government plans to completely deregulate diesel fuel prices by the end of this year, as it did with petrol a few years ago. This deregulation is expected to result in the price of diesel touching the 60 rupees/liter mark.

The running costs of diesel cars will shoot up accordingly that could in turn force car buyers to reconsider buying decisions. The triple impacts of the sales slowdown, high interest rates and diesel price hikes have already begun telling on diesel car sales and the production cutback by Maruti Suzuki is the clearest indicator yet that the sales slowdown has hit diesel engined cars quite hard.

Over the last couple of years, deregulation of petrol prices have led to a steep increase in the fuel's prices. This prompted scores of car buyers to shift to diesel engined cars, as diesel was much cheaper than petrol and with a widening gap at that. Many top selling diesel engined cars in Maruti Suzuki's line up such as the Swift and the Dzire saw long waiting periods.

Now though, minimal waiting periods and discounts have become the order of the day, even on Maruti's top selling diesel cars. As things stand currently, the running costs of diesel cars remain cheaper than that of petrol cars. Also, diesel cars hold their value much better than petrol engined cars in terms of resale value. However, the completely deregulation of diesel by the end of 2013 could have wider ramifications for car sales in the country.

Source TheEconomicTimes Image Courtesy TheHinduBusinessLine

[i74js]

This was long due for almost all players in the market. Barring 1 or 2 odd manufacturers, all other assume that India is a third world country when it comes to product launch.

Toyota - Etios (poor product), Fortuner (Over priced), Corolla (Over priced and under powered)

Tata - Will not do anything, years after years after years

FIAT - Happy with the royality of National Engine

M & M - Quick launches and niggles due to poor quality of product

HM - Making cars for British / UK, Mitsubishi - nothing to talk about their relationship with HM

Honda - Finally some hope from them, but right now with just one product "Made for India" is not going to help them long way.

GM - Let me just make a smiley here, they want to go the Chinese way, which is failing.

Germans - No new product (except Polo TSI), how long they can survive on discounts & facelifts with poor service & part availability - well God only knows.

Ford - Good product now with Ecosport but with doubts for what they sell in India.

This is country where laws are made for the benifits of automakers. Poor product quality, safety - comes as an option rather not even as option with many manufacturers and after sales - well you bought the product, its your mistake now suffer !

MSIL- Good product range & engines - but Safety? I am not sure if they have heard this word, please look at the metal they use. I am not sure if there is any analysis of MSIL cars involvement in casualities.

Hyundai - Seem to be in the right direction, lets hope they continue.

[anujatwork]

No matter where the price of Diesel goes up to, in longer run India will remain a 50:50 Diesel:Petrol story, just like Europe. Or perhaps mildly skewed towards Diesel. So pick up what you suits your need without envying the owner of the alternate fuel car. No one will be advantaged or disadvantaged by a large margin. Policy flip flops, elections and politics will keep you both even sooner or later during the holding period of 5-6 years of your car.