2021 car sales by fuel type: SUVs drove diesel demand in 2021, trend to continue in 2022 | The Financial Express

2021 car sales by fuel type: SUVs drove diesel demand in 2021, trend to continue in 2022

Despite Maruti Suzuki exiting the diesel engine space and Tata Motors discontinuing smaller-capacity diesel engines in 2020, the demand for diesel didn’t wane in 2021

2021 car sales by fuel type: SUVs drove diesel demand in 2021, trend to continue in 2022

As far as new-car sales by fuel type are concerned, in the first 10 months of CY21, 74.1 per cent cars were petrol-powered, 18.4 per cent diesel-powered, 7.1 per cent powered by CNG, and 0.4 per cent electric cars. In the same period in CY20, the sales share was 75 per cent (petrol), 18.7 per cent (diesel), 6.1 per cent (CNG) and 0.2 per cent (electric). It implies that while the sales share of petrol cars dropped by 0.9 percentage points, that of diesel cars dropped only by 0.3 percentage points. This, despite the fact that the country’s largest carmaker Maruti Suzuki exited the diesel space completely and Tata Motors discontinued smaller-capacity diesel engines post BS6 implementation from April 1, 2020, onwards.
Midsize SUVs driving diesel demand
Auto analysts argue that the rising sales percentage of sport utility vehicles (SUVs)—from 13.5 per cent share in CY15 to 38.8 per cent in January-November 2021—has led to sustained diesel-engine demand.“Buyers of midsize and large SUVs generally prefer diesel engines due to their comparatively higher torque—or pulling power—and hence offering a more fun-to-drive character,” Som Kapoor, partner, Automotive Sector, EY India, told FE.“While in hatchbacks and sedans the percentage of petrol-powered models is increasing, in SUVs diesel engine is a preferred choice,” he said. Kapoor added that new SUV launches by Hyundai (second-generation Creta and Alcazar), Kia (Sonet) and Mahindra & Mahindra (second-generation Thar and XUV700) have led to sustained diesel demand.“In the compact SUV segment, the sales share of diesel-engine variants is 35-40 per cent, but this rises to 55-60 per cent in the midsize SUV segment, and even upwards in the large SUV segment,” Kapoor said. Essentially, the more expensive the car, the higher is the diesel variants’ sales percentage within that model.
Markets that prefer diesel fuel
There are many markets where diesel outsells petrol in cars that cost above Rs 10 lakh. Tarun Garg, director, Sales & Marketing, Hyundai Motor India Ltd, told FE that while 55 per cent of all-India Creta sales (a midsize SUV priced Rs 10.16 lakh onwards) are of diesel-engine variants, “in Punjab it is 68 per cent, in Madhya Pradesh 67 per cent, in Andhra Pradesh 66 per cent, in Uttarakhand 65 per cent, and in Uttar Pradesh it is 63 per cent .”Hardeep S Brar, vice-president & head, Marketing and Sales, Kia India, said that while 35 pr cent sales share of the Sonet (a compact SUV) is diesel, this rises to 45 per cent in the Seltos (a midsize SUV).
Maruti Suzuki and diesel demand
However, connecting Maruti Suzuki’s exit (from diesel) to the demand for diesel-engine vehicles waning or sustaining may not be the right thing to do, added Gaurav Vangaal, associate director, IHS Markit. “Maruti Suzuki had announced exiting the diesel-engine space even before the start of CY20. So, the base you are calculating (January-October CY20) is without Maruti Suzuki,” he said.“At the same time, credit (for driving diesel demand) has to go to the Koreans and Mahindra. In the Thar, for instance, about 75 per cent sales share is that of diesel-engine variants,” Vangaal said.Suman Jagdev, partner, Praxis Global Alliance, added that the demand for diesel engines is significant in the overall utility vehicle (UV) segment, specifically in the midsized UV segment, which is a fast growing and highly popular space within the passenger vehicle (PV) space.“Hyundai has recorded high demand for the diesel-powered Creta and Venue SUVs. OEMs such as Mahindra and Toyota have also witnessed high demand for their diesel offerings,” Jagdev said.Going forward, in 2022, with SUVs maintaining or even increasing their sales share in the overall PV segment, the demand for diesel is likely to sustain.

Overall car sales by fuel type

FuelJan-Oct CY20Jan-Oct CY21
Petrol75 per cent74.1 per cent
Diesel18 per cent18.4 per cent
CNG6.1 per cent7.1 per cent
Electric0.2 per cent0.4 per cent

Source: Companies

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

First published on: 03-01-2022 at 09:31:38 am