Apex Court Or­der Dents Diesel Ve­hi­cle De­mand, Sales Fall 7.3% in Jan-Feb

Share of diesel ve­hi­cles in over­all pas­sen­ger ve­hi­cle sales shrank to 42% in first 2 months of this year from 45% in year-ago pe­riod

The Economic Times - - Companies - Nabeel.Khan@

timesin­ter­net.in New Delhi: The Supreme Court or­der ban­ning the reg­is­tra­tion of ve­hi­cles with diesel en­gines dis­plac­ing 2 litres and more may cover only the Na­tional Cap­i­tal re­gion, but its im­pact on buyer sen­ti­ment is coun­try-wide, say in­dus­try ex­ec­u­tives.

Sales of petrol cars and SUVs in Jan­uary–Fe­bru­ary 2016 grew 7% from a year ear­lier, whereas those of diesel-driven per­sonal ve­hi­cles fell 7.3%, in­dus­try sources said, cit­ing the ban an­nounced in De­cem­ber and the nar­rowed gap be­tween the prices of the two fu­els as the key rea­sons. The share of diesel ve­hi­cles in over­all pas­sen­ger ve­hi­cle sales shrank to 42% in the first two months of this year from 45% in the year-ear­lier pe­riod.

“Diesel pas­sen­ger ve­hi­cles have suf­fered a dou­ble-edged at­tack, first be­cause of the shrink­ing gap be­tween petrol and diesel prices … (and) then the SC rul­ing,” a top ex­ec­u­tive at a car maker told ET.

About 4 lakh units of diesel ve­hi­cles with 2-litre or heav­ier en­gines are sold in the coun­try an­nu­ally, in­dus­try ex­perts said. The NCR com­pris­ing Delhi and its satel­lite cities is the big­gest au­to­mo­bile mar­ket, and ab­sorbs 5-8% of this diesel ve­hi­cle sup­ply. Across In­dia, M&M has a more than 50% share of the mar­ket for diesel-run ve­hi­cles dis­plac­ing 2 litres or mo-

re, while Toy­ota has about 20% and Tata Mo­tors less than 5%. The ban was to end on Thurs­day, but the court ex­tended it un­til fur­ther or­ders. This and the sug­ges­tion of an en­vi­ron­men­tal com­pen­sa­tion charge on diesel ve­hi­cles have wor­ried auto mak­ers at a time when the mar­ket has re­turned to slug­gish­ness af­ter show­ing some prom­ise. They are un­happy also with the bud­get an­nounce­ment to im­pose an in­fra­struc­ture cess, where too diesel ve­hi­cles at­tract a higher levy than petrol.

The court or­der has im­pacted the sale of even smaller diesel cars as un­cer­tainty and anx­i­ety pre­vails, said Jnanesh- war Sen, se­nior vice pres­i­dent of sales and mar­ket­ing at Honda Cars In­dia.

His coun­ter­part at Hyundai Mo­tor In­dia, Rakesh Sri­vas­tava, sought con­sis­tency on poli­cies cov­er­ing the sec­tor, and said: “The con­tri­bu­tion of diesel ve­hi­cle to over­all in­dus­try vol­ume is on the de­crease … un­cer­tain­ties on reg­is­tra­tion have led to lack of cus­tomer con­fi­dence.”

To be sure, sales of diesel ve­hi­cles have been on the de­cline even be­fore the court im­posed the ban in NCR to test its im­pact on the qual­ity of air. In the fi­nan­cial year ended in March 2015, diesel car sales dropped 5.7% from the pre­vi­ous year, while those of petrol cars rose 12.35%. Diesel has been in­creas­ingly mov­ing out of the radar of In­dian buy­ers ever since the gov­ern­ment re­moved sub­sidy on the fuel, re­duc­ing the price gap with petrol. Now, with buyer pref­er­ence again shift­ing to petrol and au­thor­i­ties dis­cour­ag­ing the sale of diesel ve­hi­cles, the most im­pacted are lux­ury brands such as Mercedes-Benz, BMW and Audi. Mahin­dra and Toy­ota are also at the re­ceiv­ing end. These com­pa­nies are re­work­ing on pro­duc­tion and sup­ply strate­gies. “We have ad­justed the en­gine mix to meet the petrol de­mand in Delhi-NCR, which in­cludes higher al­lo­ca­tion of petrol mod­els,” said Joe King, head of Audi In­dia.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.