The Indian automobile industry is facing a slowdown in its four-wheel sector for last couple of months, because most of the cars sold in the Indian market are equipped with a petrol engine because its hassle free in terms of maintenance. But now since the price of petrol is going upwards exponentially, it has become kind of a luxury to own and drive a petrol engine based car. Thus the slowdown has been an inevitable factor since past few months now. Diesel has come up as the solution to this problem. Since the 2012-2013 budget has not imposed any additional tax on diesel vehicles, it has paved a way for firms like Maruti Suzuki and Hyundai to go ahead with their plans to aggrandize diesel engine’s production.
According to the Chairman, Maruti Suzuki India, RC Bhargava, in the present times when petrol price isrising at uncertain heights with no chances of them decreasing very soon, diesel is the solution. Maruti have made plans already to finalize the action for a new plant from where the diesel engines and vehicles would be produced. The company has been a leader in the sales charts with a history of more than two decades in the automobile sector of India with a benchmark setting the maximum number of service centers all across the nation. That experience helped the company to anticipate the upcoming market trend by 2007 and it started manufacturing and making available the diesel engine cars from that very year to start responding to the demand. To add more capacity to it, the company has signed a deal with Fiat Spa, the Italian auto maker to source in 2 lakh diesel engines. In addition to that, they will be setting a second plant for diesel engine at its Gurgaon based facility in India.
Elaborating the above statement of RC Bhargva, the company will have an initial yearly production of 1 lakh diesel engines with an investment of around Rs.1,000 crore. Although the Manesar manufacturing plant is making 18,000 vehicles per month, but it still can’tfulfill the growing demand for cars in the country. Thus, from now the Manesar facility will be manufacturing 3 lakh diesel engines annually in order to fulfill that increased demand. This is also to be mentioned here that the Swift hatchback of Maruti Suzuki has a waiting period of five months after an order has been placed at any of the dealerships across the nation. This shows the reliability of the diesel vehicles manufactured by the Maruti Suzuki group.
Hyundai, which is globe’s fifth biggest auto manufacturing company, has its completely-owned subsidiary in India. Greenfield plant of the company is in the process of being set up with a planned budget of Rs 400 crore to produce 1.5 lakh diesel engines on a yearly basis. Once the plant is complete, the production will cater to the local Indian market. These homemade engines will be taking their places under the bonnet of the i10 and EON cars of Hyundai. Right now the diesel engines are being imported from South Korea for the bigger cars and i20 hatchback of Hyundai. Director, Marketing and Sales, Hyundai India, ArvindSaxena, is of the opinion that right now diesel is the most stimulating factor when the question of purchasing a new car comes in the present scenario.
In the past few years the price differences between the petrol and diesel fuels have increased a lot where at present diesel is around 40 per cent cheaper than petrol in India. The money saving Indian customers prefer to spend more on the diesel vehicle at once to save the recurring expenses on the fuel.Moreover, diesel vehicles give a good mileage as well so the fuel efficiency attracts the environment savvy customers as well. At present 50 per cent of the cars sold in the Indian market are dieselcars, which make a major part of the costly SUVs and sedans. In the year 2011, the four-wheeler market saw a major slowdown in the month of July-November because of a sudden rise in the price of petrol. Till the presentation of the 2012-2013 budget on previous Friday, SIAM (Society of Indian Automobile Manufacturers) was in a state of fear with the absence of a clear planning on diesel prices and possible imposition of additional taxes by the government, which held back investments of Rs.3,000 crore and more. The fact that petrol prices are deregulated, but the government having a strong hold over the decision on the price of dieselmakes the auto manufacturers in India little worried and they fear that the government might impose additional taxes on diesel powered vehicles. Now then, with the increased demand of the diesel engine based cars, it’s an intelligent move to invest in diesel vehicles, both by the manufacturing companies as well as the customers.