Auto industry feels hike won’t affect diesel car sales

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SummaryThe government’s decision to increase diesel prices in a phased manner will have a negligible impact on sales of vehicles powered by the fuel, according to auto industry executives.

he said.

Companies like Honda Motor India, Toyota Kirloskar, Hyundai Motor India and Maruti Suzuki may see gains if buyers shift towards petrol cars. Many carmakers are straddled with high levels of unutilised petrol engine production capacity, even as they have increased investments towards setting up local diesel engine plants. Hyundai has announced an investment of around Rs 1,600 crore, part of which is for a diesel engine plant, while market leader Maruti is investing over Rs 2,000 crore in expanding diesel engine output apart from extending its engine supply contract with Fiat.

Vishnu Mathur, director general at the Society of Indian Automobile Manufacturers, said that raising diesel prices is a step in the right direction and in line with the industry body’s view that diesel prices need to be deregulated in small doses. “I don’t see an immediate change in vehicle demand. As the price difference between diesel and petrol reduces over time, we may see petrol car demand rise and diesel car demand moderate,” he said.

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