[jessie007]

Diesel skew in mid to upper segment (B+ to D segment & urban S/MUVs) car sales & emerging trend

• Following is an analysis of sales data for Diesel vs Petrol variants of various models for which monthly data is available
  
  Click on an image to enlarge / zoom:
  
  
  
  
  
  
• It can be seen that the impact of the reducing gap between the petrol and diesel prices (Delhi) is not so significant on the variant sales on the sub-segment level (it might vary more depending upon a particular model)
• These stats have been taken from the monthly sales reports thread by the Team BHP Mods (GTO, Parrys & others) - I would like to thank them for the same
• Diesel variants are still dominant whereever the option of a diesel variant is available. 'Petrol only' variants might have a significant impact on the overall sub-segment sales, but for the sake of uniformity this aspect hasn't been considered.
• Since there are no diesel variants in the 'A' (Nano, Alto, Eon, Spark, Santro, A-star) & 'B1' (Brio, i10, Wagon R, etc) segments (barring MS Ritz & Chevrolet Beat, which are being considered), it is assumed that petrol is & will most probably stay the dominant choice in this segment.
• Similarly in the case of SUVs & MUVs, it is assumed that they will predominantly have a bias towards diesel engines and hence, they are also not considered. It is to be noted though that I have considered the EcoSport & Ertiga and even Duster & Terrano which being relatively lighter vehicles have credible petrol variants
• The Ertiga is the perfect case which might show in the future a tilt towards petrol variants if say the petrol-diesel gap reduces to between 15-17%. Though torque supplied by a diesel engine is essential for a people carrier, but as a 5 seater, the petrol engine in the Ertiga is sufficiently powerful & torquey, as well as has the best fuel efficiency for a MUV.
• The real indicator will be the sales of B1 segment hatchback whose diesel variant sales currently stand at around 60%. Since B1 hatchbacks are the highest selling segment and their consumers are fairly price sensitive, the shift in demand towards petrol variants will be immediately evident in the next few months or so.
• Sale of diesel variants make up well over 50% of the sales and is in fact not below 60% for all the months analysed so far (till Feb'14)
• The colour scales are segment specific (for each month) - Green signifies that the particular model has predominant sales of diesel variants (e.g. FIAT Punto, Ford Figo) and red means the other end of the spectrum, i.e. petrol variant sales are more than diesel (Eg. Nissan Micra & the Honda City till Dec'13, and Toyota Corolla & i20 to an extent - Chevrolet's Sail twins show the skew due to the recall fiasco with their diesel engines) in that particular segment.
• Time will tell whether India is as mature a market as Europe where sales of diesel vehicles are marginally more than that of petrol, even though diesel is priced slightly higher than petrol and the fact that diesel variants are priced higher than their petrol counterparts.
• I personally feel that the skew towards diesel vehicles will remain in India even if the petrol-diesel price difference reduces to say between 18-22%, unless modern turbo petrols are sold in the mass market at little or no premium over normally aspirated petrol engines. This is based on two criteria:
  
  1) A diesel engined variant is priced about 10-20% higher than the petrol variant
  
  
  
  2) Diesel variants generally give 15-30% better fuel efficiency / average than their petrol engined counter-parts
  
  

• I'm assuming that the relatively higher cost for servicing diesel-engined vehicles are easily offset by the higher resale value of diesel vehicles, which generally is the case if the two variants have equal mileage, but usually diesel engines are sold at a higher mileage
• For a realistic analysis of the break-even kilometres for diesel & petrol variants of the same car, you can visit my other thread which has realisitic servicing costs from fellow BHPians' Long-term reports
  http://www.team-bhp.com/forum/indian...esel-cars.html
• Here is a link to an interesting article w.r.t. the American car market and diesel engined vehicles
  http://www.businessinsider.in/10-Reasons-You-Should-Buy-A-Diesel-Car/articleshow/21967160.cms

P.S. Please report to me any anomalies in the analysis and I'll correct them in due course

[jessie007]

• Following are the monthly car sales stats with segmentation as per my personal choice
• These include figures for segment-wise market share over a period of last month, 3 months and 6 months. These numbers give a fair picture of each vehicles market share within its own segment and whether they are gaining or losing
• Segmentation might not be perfect but I have done it to the best of my knowledge
• I have left out some vehicles with low sales, that have negligible impact in overall market share
• Top 10 sellers for each month over the past six months are highlighted (in yellow)
  
  Click on an image to enlarge / zoom:

[wilful]

Time will tell whether India is as mature a market as Europe where sales of diesel vehicles are marginally more than that of petrol, even though diesel is priced slightly higher than petrol and the fact that diesel variants are priced higher than their petrol counterparts.

My view is that if ever the price difference between the 2 fuels came down to single digits, the diesel tilt would slow down considerably, maybe even begin to gradually reverse in some segments. I think we (Indians) generally would look at the immediate outflow i.e. the capital cost and on seeing the largish price differential between petrol & diesel cars, would then move in greater numbers for the cheaper option focussing on the immediate benefit.

[jessie007]

The opening post is updated with December car sales stats, as well as fuel prices.

Points to Note:

• With the same difference in fuel prices ~ 25%, sales of diesel vehicles are down by around 3% (for vehicles with both petrol & diesel variants and whose sales break-up is available)
• The diesel skew in premium hatchbacks is down to 54% in December versus 60% in November (change of 6%) - Change led by volume players / models - MS Swift & Grand i10
• Opposite scenario in case of Compact Sedans with diesel variants accounting for 73% of total sales versus 69% (change of 4%), led by Toyota Etios
• C+ segment remains stable at 73-74% - but we'll be a better picture with sales figures for Honda City in Jan'14
• Urban S/MUVs show a skew towards diesel variants, but sale of fewer diesel variants of Ertiga, bring down the overall diesel percentage for the segment from 88% to 82% (down 6%)
• Even with marginal change in difference between the fuel prices (in Delhi), the overall skew towards diesel vehicles has reduced significantly from 66.2% in November to 62.9% in December'13 (Down 3.3%)
• With another hike in diesel prices, sales stats for Jan'14 will throw up an interesting picture

[geotracks]

Originally Posted by jessie007

[*]Opposite scenario in case of Compact Sedans with diesel variants accounting for 73% of total sales versus 69% (change of 4%), led by Toyota Etios
[*]Even with marginal change in difference between the fuel prices (in Delhi), the overall skew towards diesel vehicles has reduced significantly from 66.2% in November to 62.9% in December'13 (Down 3.3%)
[*]With another hike in diesel prices, sales stats for Jan'14 will throw up an interesting picture

The Toyota Etios scenario might continue to favor towards diesel irrespective of diesel price hike, because of the volume sales they see is thru' taxi fleet operators. A real comparison to Vento, Sunny diesel, Rapid etc. will be to see sales with private party buyers. Of course the segments maybe different, e.g. C1 (Etios) v/s Veto (C2), but still interesting to see how many 'individual' buyers are preferring diesel v/s petrol options with rise in diesel prices etc.

I think, even if price difference between diesel & petrol comes to single digits, owing to the fact that diesel vehicles give better torque & higher mileage, in the Indian market they will still continue to see good numbers.

[ku69rd]

When I was in the market looking for a car, the following were the basic indicators for me to close the deal.
1) Better Driveability
2) Fuel Efficiency
3) Easy on Maintenance

The first 2 objectives were easily met with the diesel engine when compared to the petrol powered swift. The maintenance was a bit of a wager that I took up and she did not disappoint me.

Another point which would be worthwhile considering is the average annual drive one would do. Diesel Engines are generally known to last longer than petrol due to their inherent design.

If and only if the petrol cars come with turbo which meets the first 2 parameters, a matured decision to buy would still be the diesel irrespective of its cost to a liter.

[GTO]

As you rightly mentioned, diesels are inherently more fuel-efficient than petrols. Therefore, even if the price comes on par with petrol, oil-burners will remain cheaper to run. As an example, the Sunny petrol gives 10 - 11 kpl in Mumbai city traffic. My Sunny diesel consistently delivers 16.

Then, diesel is better suited to MUVs, SUVs & commercial vehicles (load carrying capacity, tank range etc.) and will remain dominant in these categories.

Lastly, with some cars, the diesel motor is hands down superior to the petrol offering. Think i20 CRDi vs the puny 1.2L, or the Jetta 2.0 TDI vs 1.4L TSI.

[drmohitg]

Unless they bring the diesel prices extremely close to petrol prices, I really don't see the petrol cars making a comeback. The ARAI FE figures that you have quoted are even more skewed in reality than what your table shows. My experience has been that petrol FE is a lot different than ARAI figures whereas diesel cars can come very close to there ARAI claimed figures.

[mints21]

[/quote]

Originally Posted by GTO

As you rightly mentioned, diesels are inherently more fuel-efficient than petrols. Therefore, even if the price comes on par with petrol, oil-burners will remain cheaper to run. As an example, the Sunny petrol gives 10 - 11 kpl in Mumbai city traffic. My Sunny diesel consistently delivers 16.

Then, diesel is better suited to MUVs, SUVs & commercial vehicles (load carrying capacity, tank range etc.) and will remain dominant in these categories.

Lastly, with some cars, the diesel motor is hands down superior to the petrol offering. Think i20 CRDi vs the puny 1.2L, or the Jetta 2.0 TDI vs 1.4L TSI.

Diesel cars are fun to drive. I have both the petrol and diesel variants of i20. The fun and enthusiasm associated with the diesel version is much more than that of petrol. The only thing I do not like is slight turbo lag in the 2nd gear and the noise it produces when you compare it with its petrol sibling.

The fuel efficiency is greater when compared to the I20petrol variant. As of today when I get the fuel tank top up, I still feel the difference in the price of both the fuels is too much as one is quite soft on your wallet while the petrol is another way round.

[jessie007]

- The second post has been updated with January 2014 car sales stats.
- Still awaiting the official Team BHP report for the petrol/diesel sales split for Jan'14. Will update when that report is posted.

[GTO]

Thread moved from the Assembly Line to the Indian Car Scene. Thanks for updating!

[Cooltronics]

Originally Posted by GTO

As you rightly mentioned, diesels are inherently more fuel-efficient than petrols. Therefore, even if the price comes on par with petrol, oil-burners will remain cheaper to run. As an example, the Sunny petrol gives 10 - 11 kpl in Mumbai city traffic. My Sunny diesel consistently delivers 16.

Then, diesel is better suited to MUVs, SUVs & commercial vehicles (load carrying capacity, tank range etc.) and will remain dominant in these categories.

Lastly, with some cars, the diesel motor is hands down superior to the petrol offering. Think i20 CRDi vs the puny 1.2L, or the Jetta 2.0 TDI vs 1.4L TSI.

Truly said GTO but technically & scientifically speaking, gasoline (Petrol) is the final output of the fractional distillation process and hence the cost of generating gasoline (Petrol) from Crude Oil is higher than that of generating Diesel from Crude oil so the price of Diesel and Petrol can never be at par.
Even if we look at the news from oil companies about the losses that they make for every litre of Diesel, it is close to approx 6 Rs and if Diesel happens to get de-regulated, the price at the max can be 66 Rs (which is also the price at Shell outlets) as compared to Petrol which costs 78 Rs approx.
Considering this price difference, better fuel efficiency and better driveability of Diesel Cars, they are bound to be sold more in cases where
a) Your total driving in a year is significantly high so that the difference in additional cost in buying Diesel Car is offset. That magic number of 30k or 40k would shoot up to 55k approx.

b) Segments like current hatchbacks which are restricted to 1.2L petrol engine would find enthusiasts buying more peppy diesel engines but it would still turn away normal users who have not so high driving towards petrol.

c) SUV's, MUV's and Commercial Vehicles which would find it viable to use Diesel. However, we might also see revival of cars like Honda CRV, Civic, Accord which are near extinct (or extinct) for petrol heads who do not mind spending a little more on fuel if their usage is less

[mpksuhas]

Wonderful analysis Jessie.
I guess, realistically as Cooltronics pointed out; even if Diesel price is de-regulated it will be cheaper to run Diesel cars compared to Petrol due to two points.

1. Diesel will remain cheaper in India compared to Petrol. A scenario like Europe mentioned at start where diesel is costlier than petrol is highly unlikely due to political pressures. If government is not able to / is not controlling the diesel prices they can change tax rate to keep diesel rate below petrol.
2. Diesels models gives more mileage than petrol of same model.

However what will change is the break-even time. The current break-even KM's is usually mentioned in range of 30 / 40 thousand KM's. This will keep going up.

However I guess for general car buying public the break-even concept is still not valid, I guess average car buyer will not be calculating their average monthly usage and duration they are planning to keep the car before making a decision on car purchase.

Regarding the comparison of Diesel Vs Petrol variant pricing of each model, I guess there is one other customer behavior which is bit difficult to predict, I would explain this based on decision made by two of my friends (both first time car owners) who wanted to buy Swift.

They went to showroom, liked top petrol varient -ZXI and almost decided to book it. Later saw in the price list that base diesel models (LDI, VDI) costs almost equal or less. So they opted for diesel, one guy selected LDI other VDI. Their logic was diesel is cheaper fuel, feature wise only thing they were concerned about was audio player & alloy wheels (ABS, Airbags be dammed). I guess this will be the mentality of most of the buyers.
Now, it is almost 2 years since they got the car and both cars ODO reading is around 8~10 K KMS. For them to recover extra cost for diesel may not be possible in lifetime of the car. However as per them they are spending lesser compared to petrol owners on each tankful and only extra cost they had to incur on selecting diesel variant was ~ 8K for music systems.