Despite a Rs 5 a litre hike in diesel prices by the government, industry players feel the move is unlikely to impact sales of passenger of commercial vehicles (CVs). While freight tariffs may rise by 10-12% trucks, light commercial vehicles (LCVs) and passenger cars prices may more or less remain the same.
"Even today, the price difference between petrol and diesel is large at Rs 21-22 per litre. We don't see any impact on sales of passenger cars or decceleration in shift from petrol to diesel. The festive season, however, may see a marginal impact," said P Balendran, vice president, General Motors (GM) India, adding that diesel still forms over 80% for its Chevrolet Beat car.
After about 14 months, the government recently increased diesel prices by Rs 5 a litre, of which Rs 1.50 would be on account of a rise in excise duty. Price discounts for Mahindra & Mahindra is also yet to begin. "It is too early to predict any impact on price discounts. We are waiting to see how markets behave during the upcoming Ganesh festival before taking a call on price discounts," said Jacob Varghese, senior general manager - sales (west), automotive sector, at Mahindra & Mahindra.
On the commercial vehicles front too, according to Anirudh Bhuwalka, managing director & CEO, AMW, major truck makers are in a wait-and-watch mode. "Now that the monsoon is behind us, the September to March period is a better time for CV sales. Hence, a Rs 5 per litre hike may not see much impact. However, we are on a wait-and-watch mode for next few days before taking any decisions on price hike," said Bhuwalka.
Seconding his views, Rajiv Lohia, of Kolkata-based RD Motors, a dealer of Tata Motors Limited said, "The period so far was considered inauspicious for buying vehicles. It is only now that buying will resume and a price hike is unlikely to impact the sales."
According to a government statement, the combined impact of diesel hike and cap on subsidies for six domestic LPG per annum would reduce the underrecovery of government oil marketing companies - IndiaOil, Bharat Petroleum and Hindustan Petroleum - by about Rs 20,300 crore this year.