As the fuel prices of petrol and diesel have come on par with each other, there seems to be no logic in opting for diesel-run cars. With the close proximity of prices between the two fuels, buying more expensive diesel cars instead of petrol ones does not hold sense.
The Executive Director (Marketing & Sales), Maruti Suzuki India Limited, Shashank Srivastava said that under BS-VI, the disparity between petrol and diesel Cars is around Rs. 1.25 to Rs. 2 lakh. He highlighted that with the costs coming down to becoming the same, and more so diesel being costlier in some states, there is no economic logic in buying diesel cars anymore.
He reminisced the times, 7-8 years back, when diesel costed Rs. 32 less than petrol and diesel cars were more in demand, marking 60% of the overall sales.
Thereafter, the government allowed free float of fuel prices and last year the difference fell to Rs 7 and diesel car share fell to 28 per cent.
Mr. Srivastava said that in last few months, this share has declined to 17 per cent, majorly due to the parity between petrol and diesel prices. Moreover, in the smaller cars sector, it was only 5 per cent.
He pointed out that with diesel prices staying similar to petrol, customers would prefer to buy petrol cars rather than diesel ones as there’s no benefit in spending Rs. 1.25 lakh- Rs. 2 lakh more.
In higher segment for SUVs, some consumers still prefer diesel vehicles but in small cars and sedans there is no economic logic, he said.
He further said that the new rising star in the market is CNG as its gaining more demand through its cheaper rates. It costs only Rs. 1.5 per kilometer and, since the advent of increased prices of the usual two fuels, has earned 6-7 market shares and in some models, the CNG penetration is as high as 70 per cent.
The government is also trying to empower CNG network with an increase of close to 1000 outlets this year in the country. The previous 2100 outlets will now come up to 3000-3500 in the country.
On the demand dynamics, Srivastava said June was a good representative month after a long gap. The enquiries, bookings are at 80-85 per cent of pre-Covid levels. “It’s a good comeback”. However, he said that this largely included the pending sales of the pre-covid times.
Maruti has reopened 2800 of its showrooms. On the supply side, industry is at 50 per cent of pre-Covid levels.
As far as the sales of cars is concerned, Srivastava said that due to the stripping of jobs and business losses, consumers are looking to buy smaller cars. The 55% share value of small vehicles has now risen up to 65%.
He added that customers will try to be less experimental and opt for the tried and tested methods, meaning that they will buy cars of the brand which are in the game since long and have proven their worth.
Furthermore, the bookings for pre-owned cars have increased but the fact is that people aren’t selling their old cars and holding on to it during these difficult times.
He said that the reason for the sales and denial to sell old cars is that people aren’t trusting public transportations anymore and choosing to travel in their own vehicles to stay safe.
Maruti has rolled out financing arrangements with more flexibility on tenure, EMIs and cash down requirements to help consumers.
On the covid front, Srivastava said that the sales might increase if there’s a development of a vaccine soon and the same comes into the market, until then, the scales are very unpredictable.
He said there is revival of rural demand with a good crop and encouraging monsoons. Moreover, the rural areas have been hit less strongly as compared to metropolitan cities.
