Diesel cars in India: Uncertainties in fuel pricing policy makes buyers wary

While the past year has seen increased demand for diesel cars, this new found popularity failed to withstand the test of time. Petrol prices were on the rise and this made diesel cars more attractive to many first time buyers. Diesel cars which once had a long waiting list and came in with heavy discounts are now seeing pile up of stocks at company showrooms. In short the bubble has burst and buyers are once again opting for the tried and tested petrol and CNG variants as they are concerned of any sudden diesel tax or hike in prices of diesel which may come in out of the blue.

The reduction in price gap between petrol and diesel has also taken some of the sparkle away from diesel variants. While earlier this year, price gap between diesel and petrol was hovering around Rs.26, today this is down to Rs.20. The demand for diesel variants began slipping when prices were recently raised by Rs.5 per liter.

Car sales in general fell for the third time in four months in November 2012. Rising fuel prices, high interest rates and fears of job losses has resulted in this dip in demand. As per inputs received from Society of Indian Automobile Manufacturers (SIAM) local car sales dipped 8.3% to 158,257 cars in November 2012 as compared to 172,493 cars sold in November 2011.