Diesel cars tumble to low of 1.8% of small car, sedan sales in April-July – Times of India

NEW DELHI: The Indian car buyer does not want to buy diesel-powered vehicles anymore. The share of diesel variants in sale of small cars and sedans has fallen to just 1.8% during April-July, 2020 period — the lowest in recent history — as top manufacturers such as Maruti Suzuki have exited the segment due to the ever-narrowing gap between petrol and diesel prices.
In any case, the higher price of diesel vehicles — costing at least Rs 1 lakh more — has been a deterrent. The introduction of BS6 engines from April has also pushed up the price of diesel vehicles, driving away Maruti Suzuki and Volkswagen from the market.
Such has been the fall from grace for diesel cars that CNG, whose availability is limited to a few states, currently has a 14% share of the cars and sedans market. Diesel’s decline isn’t limited to cars. In the SUV category, the share of diesel variants has fallen to 42% in April-July, 2020, according to numbers sourced from market research firm JATO Analytics.

In 2011-12, diesel ruled SUV segment
The fall for diesel has been steep if one compares it to highs it once enjoyed. Around 2011-12, nearly 98% of SUVs and utility vehicles sold in India were fired by diesel, with petrol virtually out of the market. In the car market, diesel had a 47% share of the pie in 2012-13 (even touching 50% share in some months), while petrol was 53%, as per numbers provided by industry body Siam.
The reasons for the fall in the share of diesels have been building up over the years. Among the primary ones are the narrowing gap between the fuel price of petrol and diesel. In May 2012, when the share of diesel was perhaps at its peak, the price gap between petrol and diesel fuels was nearly Rs 33 a litre in Delhi, making it highly attractive for buyers to pay a premium for a diesel vehicles, which were more fuel-efficient. Now the gap is a mere Rs 7 a litre. In fact, for a brief period around the early part of July this year, diesel was a tad expensive than petrol due to the high level of VAT in Delhi.
Apart from this, the rollout of BS6 – which required companies to make heavy investments in upgrading engines to cleaner and stricter emission norms — saw many of them withdraw from the category, taking away large-selling models from the category.
“Pollution across Indian cities forced the hand of regulators and led to Indian car companies being forced to leapfrog early into BS6 from BS4. The cost of upgrade for managing NOX (nitrogen oxide) and particulate matter targets for diesel models was high and post evaluation, many companies decided to drop the upgradation of diesel models,” Ravi Bhatia, president of JATO India said.
Importantly, as per JATO, there are 97 petrol-only models in India today compared to 15 diesel-only models. Models which have both petrol and diesel are 45.
Another key reason for the diesel withdrawal is the lower life of the vehicles in a key market such as Delhi-NCR which allows registration for only 10 years against 15 years for petrol. “People are not comfortable buying diesels, thinking that they will need to upgrade faster.”