If you are planning to buy a petrol car this Diwali, be prepared to wait a little.
With the price differential between petrol and diesel narrowing to about Rs 10 per litre, a far cry from the Rs 32 high two years ago, petrol cars are on a high.
From small cars such as the Hyundai Grand i10 and Maruti Celerio, to compact sedans such as Honda Amaze and Tata Zest, to even utility vehicles like Honda Mobilio, petrol variants are commanding waiting periods of three to 16 weeks.
The surge may not surprise, given the government’s decision last January to bring down the subsidy on diesel, which has seen 18 price hikes since then.
But for the automobile industry, which was at one point of time struggling to come to grips with the huge demand for diesel vehicles, adjusting to this new trend has not been easy.
“The price difference between petrol and diesel prices has come down and that has seen an increase in demand for petrol cars,” said Rakesh Srivastava, senior vice-president, marketing and sales, Hyundai Motor India Ltd.
“The Indian consumer today is very evolved and calculates which fuel works best for him.”
Following the government’s decision to decontrol the prices of petrol in June 2010, its cost had gone up by over 33% between July 2010 and 2012. But diesel, which had not been de-controlled, nudged up a bare 3%.
This resulted in an almost immediate and dramatic impact on the sales of cars and SUVs around the country. Sales of entry-level small cars slipped in favour of bigger versions that had diesel options, and even SUVs.
From just 32% in July 2010, the share of diesel vehicles in overall automobile sales in the country rose to over 50% by the first half of 2013. The reversal has been equally drastic.
In the last 12 months, diesel prices have gone up by over 13.5% largely due to a phased price deregulation. Prices of petrol, on the other hand, have gone down by almost 10% in the same period, as international crude prices declined.
The cost differential between the two fuels, now at Rs 9.54 per litre, is at its lowest level in over four years.
“The share of diesel variants in total domestic sales of passenger cars and utility vehicles has started falling since peaking at 58% in fiscal 2013,” says an analysis by Crisil research.
“We expect diesel vehicles to close this fiscal with 45% of the market even as the share of petrol cars runs up to 55% from 42% that year.”