Suzuki Motor Corporation has reported a drop in diesel car sales by its Indian arm, Maruti Suzuki, during the first quarter of this fiscal, compared to the same period last year.
Of the 2.45 lakh cars it sold between April and June 2013, the diesel range accounted for 34 per cent, at 84,000 units. In contrast, the first quarter of last year had diesel cars making up 38 per cent of sales (1.01 lakh of 2.63 lakh cars).
These figures were part of Suzuki’s financial results, released in Japan earlier this month.
Price trends
Interestingly, sales of Maruti’s petrol cars were constant at 1.62 lakh units during the quarters of both years, a clear indication on where fuel preferences are heading in India.
Maruti’s diesel range includes the Ritz, Swift, DZire, SX4 and the recently introduced Ertiga multi-purpose vehicle. In its presentation, the Japanese parent has also highlighted fuel price trends in India over the last year.
Diesel, which was being retailed at Rs 41/litre last May, has since seen a 25 per cent jump to over Rs 50/lt today.
Petrol has been steadier at Rs 71/lt during this period and, in fact, even fell to Rs 65-68/lt at the start of this fiscal.
Subsidy mechanism
The Indian Government had decided to remove diesel from the subsidy pricing mechanism on the lines of what was done with petrol some years ago.
In the process, it opted for small hikes of 50 paise per month, keeping in mind diesel’s potential to stoke inflation, especially with its large use in the truck segment.
Even these marginal price increases have deterred car buyers, who had initially made a beeline for diesel when it was considerably cheaper than petrol.
A price differential of Rs 30/lt over a year ago has since reduced to Rs 20/lt which could just weigh the scales in favour of petrol all over again.
Sales of compact petrol cars, such as the Alto and Hyundai Eon, are on the rise as they offer the added advantage of mileage. Suzuki and other carmakers were betting big on the diesel boom in India but recent trends suggest that the party may be coming to an end.
This is equally true for others, including Ford, Toyota, General Motors and VW, which were bullish on sales of their premium diesel hatchbacks.
Honda had recently thrown its hat in the diesel car ring with its Amaze entry-level sedan.
The market response to the car has been phenomenal and it will be interesting to see if the diesel version continues to outsell its petrol sibling.
Suzuki licences its diesel engine technology from Fiat Auto and had, early last year, signed a pact to increase its requirement of engines for India.
It was this perceived bonding with the Italian carmaker that (among other reasons) led to a rift between Suzuki and Volkswagen.
The two had, in end-2009, decided to work together and even formed an equity crossholding alliance.
Industry watchers are now wondering if they will formally call it quits.