While there has been a ‘gradual shift’ to petrol in the overall passenger vehicle segment — thanks to diesel price decontrol — in subcompact sports utility vehicles (SUVs under 4 metres in length) —that shift happened comparatively late, and has been rather steep. In April 2019, diesel subcompact SUVs enjoyed a 76% share, which dropped sharply to 23% in July 2020, according to data from industry body Society of Indian Automobile Manufacturers (Siam). While this drop can be attributed to Maruti Suzuki replacing the diesel engine with a petrol one in Vitara Brezza (highest selling SUV in segment) in February 2020 — in that month the diesel share in the segment dropped to 21% — analysts say this shift speaks of the larger customer mindset change post-BS6, even in a segment where diesel was long perceived as the fuel of choice.
“With the shift to BS6 emission norms, the price gap between petrol and diesel vehicles, including small SUVs, has increased, and with the difference in fuel prices also narrowing, customers in this price-sensitive segment are realising that petrol SUVs make better economic sense,” said Rajeev Singh, partner & leader, automotive, Deloitte India.
Som Kapoor, partner, automotive sector, EY India, said with fuel prices almost on a par, customers now understand that the total cost of ownership (TCO) of a petrol SUV is lower for, say, a five-year period or even a 10-year period. “Policies such as in Delhi where one can run a diesel car only for 10 years and a petrol car for 15 years are accelerating this shift, even in SUVs that traditionally have been diesel,” he said.
Maruti Suzuki, which doesn’t offer a diesel engine in any of its cars, has been running campaigns at its dealerships and on its website to make prospective customers more aware about the TCO of a car. Shashank Srivastava, executive director, marketing and sales, Maruti Suzuki India, said there is little economic logic to buy a diesel car. “We have created a calculator based on the distance travelled, the place the person lives in, the diesel and petrol prices in that area, and the upfront cost of the car. SUV customers are getting convinced — even in rural areas — that petrol is often a more economical choice,” he said.
This, Srivastava added, is reflected in the rising sales of the Vitara Brezza petrol — in the post-BS6 May-July 2020 period, it outsold every other SUV in its segment (12,921 units; 41% segment share), despite others being offered in both petrol and diesel. A diesel engine, due to higher fuel compression ratio inside the cylinder, is more fuel efficient than a petrol engine; it also produces more torque, or pulling power. To offset that, Maruti is offering mild hybrid technology in its petrol SUVs. Called the smart hybrid, it has various fuel-saving features, such as the engine stops automatically when idling, and a lithium-ion battery that assists engine power.
While Maruti has been betting big on petrol SUVs, Hyundai India said it will continue to offer fuel choice to customers. Its subcompact SUV, the Venue, has sold 12,105 units post-BS6 (8,332 petrol and 3,773 diesel). Tarun Garg, director, sales & marketing, Hyundai Motor India, said Hyundai has been getting strong demand for both petrol and diesel offerings across its SUV range (Tucson, Creta and Venue). “While there is an apparent shift in the industry towards petrol, our diesel SUVs are seeing increasing demand,” he said. This demand, however, is more for bigger SUVs such as the Creta — post-BS6, 56% of new Creta bookings have gone to diesel — and lesser for subcompact SUVs such as the Venue (31%).
Singh of Deloitte added that diesel is likely to remain the fuel of choice in bigger SUVs. “In bigger SUVs the economic advantage of a diesel is still there, and consumers consider another parameter, which is the torque provided by the diesel engine, because these SUVs are heavier.”
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