SUV enthusiasts, particularly in the entry and mid segments, are giving the fuel the short shrift, said industry insiders, as an increase in the price of diesel-run vehicles with the transition to BS-VI emission standards has erased gains from lower running costs. More than four out of every five SUVs sold at the entry-level in India now run on petrol, up from about a quarter three years ago. In the mid segment, the share of petrol has grown four-fold to 45.3% in the same period.
Several senior industry executives ET spoke with said in addition to the sharp increase in the price of diesel vehicles, narrowing price differential between petrol and diesel and the ban on diesel vehicles aged over 10 years from plying in the National Capital Region (the largest market for passenger vehicles in India) have dampened demand. The Delhi government has also been restricting movement of BS-IV-compliant diesel vehicles intermittently in a bid to manage the capital’s notorious air quality in winters.
Maruti Suzuki to Hyundai Motor India and Honda Cars India pulled the plug on more than 50 models of diesel cars and utility vehicles in the last three years, amid the shift in consumer preference to petrol. This shift to petrol is more pronounced in small cars and sedans where the share of diesel now stands at 1.2% (9.6% in FY19) and 2.4% (40.1% in FY19), respectively.
Shashank Srivastava, senior executive director (marketing and sales) at Maruti Suzuki, said economics of owning a diesel vehicle was not favourable anymore. “If running cost of petrol and diesel vehicles is nearly similar, why should a consumer pay a higher acquisition cost to own a diesel vehicle? Diesel is no longer viable in hatches and sedans. In the SUVs, too, diesel is relevant only at the higher end of the market,” he said.
