Diesel phase-out won’t hit Maruti sales: Bhargava

PUNE: Maruti Suzuki is confident that the diesel car phase-out next year will not impact its sales, as buyers would migrate to petrol cars since the stringent new Bharat Stage (BS)-VI fuel emission norms that kick in from April 1, 2020 make diesel cars expensive.

“Maruti sales will not be impacted when we plan to stop selling diesel cars in the country from April 1, 2020,” RC Bhargava, Chairman at Maruti Suzuki India Limited told Financial Chronicle in an exclusive interview on Monday. “We are very sure, this move will not dent our sales volumes,” he stressed.

At present diesel cars at Maruti, which sells one car out of two bought in Asia’s third biggest economy, account for almost a third of its sales. “We expect buyers preference to change swiftly in favour of petrol, compressed natural gas (CNG) and other alternative technologies as diesel cars fall out of favour because of the steeper price premium they will command,” he pointed out.

Bhargava said with the implementation of BS VI emission norms, diesel cars would be much more costlier than petrol cars.

“Even the price between petrol and diesel has narrowed so much (today) that buyers would definitely prefer to own a petrol car,” he said. The Maruti Suzuki head, credited with building the biggest brand in the country with over 50 per cent market share, should know better.

According to him, the difference between petrol and diesel fuel was over Rs 32 per litre earlier. “Today it is less than Rs 8,” Bhargava said, adding that the aspiring buyers would prefer to go for the petrol cars.

Auto experts also said the cost difference of the diesel cars, which were over Rs 1.5 lakh at present, would rise to over Rs 2.50 lakh to Rs 3 lakh from next April, which would be unaffordable for mass market car buyers.

At present, a range of Maruti's bestselling models like Swift, Dzire, Baleno, Ertiga, Ciaz and its two popular SUVs Brezza and S Cross have diesel variants.

“Even in Europe we have seen diesel sales de-growing after the introduction of Euro VI norms. In the Indian market the impact could be even more accentuated as this is a more price sensitive market,” Bhargava pointed out.

Though he said traditionally there has been a bias towards diesel among SUV buyers in the country, he sees no reason why petrol SUVs would not be preferred in the future.

In fact, experts pointed out that till 2014, the high differential in the price of diesel and petrol, which rose to Rs 27.19 per litre in July 2012, made diesel the preferred choice of fuel for customers.

In 2012-13, for the first time, the share of diesel car sales at 58 per cent outstripped that of petrol.

In July 2016, the National Green Tribunal banned all diesel cars which were over 10-years-old in the national capital region--the largest market for cars in the country—dealing a body blow to the diesel lobby.

Now the economics also work against diesel vehicles, with the price difference between the two fuels today at just Rs 6.48 per litre. This is the closest the two fuels have ever come to in terms of price since October 1990.