Carmakers in India have never had a tough time like this before. Reports have been emerging from various corners on the decontrolling of diesel fuel price, hiking excise duty on diesel cars etc with petrol prices already at sky high. It seems like carmakers are deeply worried on how to handle the situation. Moreover, the demand for diesel cars are at an all time high due to frequent petrol price hikes.
With car makers already increasing production capacity of diesel cars and investing cores on diesel engine manufacturing units, reports on government's plan on diesel price decontrolling and hiking excise duty on diesel cars may not have gone down well with major carmakers like Maruti Suzuki and Hyundai Motors. Both the companies have been planning to make big investments on diesel engine units in India.
With petrol car sales already down, these carmakers fear a slump in sale of diesel cars also If the excise duty on diesel cars is hiked and diesel price is decontrolled. Reports that the finance ministry is reportedly examining a duty-hike proposal to discourage the consumption of subsidised diesel is adding fuel to thir concerns.
On the other hand carmakers like Honda and Toyota have different views. Honda Siel vice-president (marketing) Jnaneswar Sen says: "The government should provide a level-playing field for petrol and diesel vehicles so that the buying decision depends on a consumers' desire for a particular vehicle and not government subsidy." Let's not forget the fact that Honda doesn't have a diesel engine yet and the carmaker has been losing its market share poorly due to that reason.
Japanese auto giant Toyota Motors has also urged the government to decontrol the price of diesel. The company says that the current government policy on controlling diesel prices is not conducive to growth and is hampering demand in the market.
Anyhow, these carmakers are turmoil with no clarification from the government on these issues. Strategy making seems to be a tough job for them in the largest growing car market.