Diesel car sales plummet to 5 year low this fiscal

Sales of diesel cars in India have hit a five year low this fiscal (till May 2015) with only 33% of cars sold in the domestic market are powered by the cheaper fuel. In 2012-13 fiscal, diesel car sales peaked with a proportion of 47%.

Diesel car sales in India 2015
Owing to declining demand for diesel variants, Maruti shelved its plans to set up second diesel engine plant.

This downturn can be attributed to factors such as reducing price gap between petrol and diesel as automotive fuels (additional cost of over INR 1 lakhs for diesel variant compared to petrol variant of same model is no longer justified) and policies like NGT ban which prevents diesel vehicles that are more than 10 year old from plying NCR roads. The NGT ban resulted in drastic drop in resale value of diesel cars.

From January 2013 to June 2015, the price difference between petrol and diesel fuels has reduced by nearly INR 4 rupees per litre. As things stand now, diesel is just INR 16.03 per litre more expensive than petrol. Deregulation on diesel by the government has resulted in increased price. The price difference is poised to come down further in the future.

OEMs like Maruti, Ford, Honda, GM, VW and Mahindra who rely on their diesel models are reporting sales decline. So, the production split has now tilted in favor of petrol models. It’s estimated that the diesel car sales will stabilize at 25-30% on a long term with upcoming new compact crossovers as the main contributors.

Via – EconomicTimes.com