Click it and Unblock the Notifications
Carmakers Scared Of Decontrolled Diesel
What the carmakers are worried about is the lack of clarity in the government's policy on the automobile industry. The government has only stated it wants to decontrol diesel prices but has not set a time frame for it. Many carmakers have invested heavily in to diesel cars following the surge in demand in the past two years.
Maruti Suzuki can be considered to be one of the biggest affected carmaker if diesel prices are decontrolled. The Indian carmaker which was primarily a petrol car seller bought diesel engine technology from Fiat and is now expanding its diesel engine production in Gurgaon.
80% bookings of Maruti's models such as the Swift and Swift DZire are for diesel now. If diesel prices go up, many people will quickly switch to petrol variants creating a completely opposite scenario from the current ones. Maruti and other car makers are now struggling to sell as many petrol cars as they previously did and are also offering discounts to attract petrol car buyers.
India's second largest carmaker Hyundai Motors is also among the worried carmakers as it has started work on a new diesel engine plant near Chennai. The Korean carmaker restarted work on the diesel engine plant following the union budget 2012-13. Korea ha doubled production of the diesel variants of its i20 and Verna in recent months.
Carmakers feel the shift towards petrol cars will not be very drastic and they might have to reduce some of their investment in to diesel cars. Some carmakers have said they are flexible enough to handle any changes in the market.
Diesel cars in India have become increasingly popular mainly due to the lower price of diesel as well as the higher mileage delivered by diesel cars.
Continue with Google