Fuel gains mileage from accelerated auto sales

Petrol, diesel hit record consumption in May

The country’s consumption in May of petrol and diesel was the highest ever, with rising sales of passenger and commercial vehicles.

Almost all petrol is taken for cars and two-wheelers. About 70 per cent of all diesel goes for transport and the rest to both agriculture and industry.

Data with the Petroleum Planning and Analysis Cell, a wing of the petroleum ministry, shows 2.08 million tonnes (mt) of petrol consumed in May. The earlier record was this March, of 2.04 mt. In the first five months of 2016, nearly 9.8 mt of petrol was consumed, 14 per cent more than the nearly 8.6 mt during the corresponding period last year.

This rise is attributed to two things — a shift in preference of car buyers due to the regulatory uncertainties on diesel vehicles and a narrowing price gap between the two fuels. The latter narrowed in the past year from Rs 18.35 a litre to Rs 10. Data from the Society of Indian Automobile Manufacturers shows the share of diesel variants in new cars was 26 per cent in May; four years earlier, it was 52 per cent.

Also, sales of passenger vehicles (PVs) and two-wheelers have been increasing, creating demand for additional fuel. After a record 2.78 million units of PV sales in FY16, these grew 6.7 per cent in the first three months of 2016-17, April-June, to 697,154 vehicles. New launches have been driving sales. Two-wheeler sales, up only three per cent in FY16, grew 14 per cent in the quarter, to 4.54 million units. The salary increases for government employees and a better rural economy this year should further drive these sales.

As for diesel, PPAC data show consumption at a record 6.95 mt in May; the earlier record was this March, at 6.78 mt. The rise in the five months of January-May was nine per cent, to 33.2 mt. Less than petrol's 14 per cent rise but diesel growth comes on a much larger base.

PPAC has also attributed the rise in diesel consumption to infrastructure projects, initiated by the government. Diesel will be a clear beneficiary of the push on manufacturing and infrastructure improvement, the agency said.

"The commercial vehicle sector is slowly but surely reaping the gains of the improving Indian economy and is recording month-on-month growth,” it added. After growth of a little over 11 per cent in FY16, these grew 13 per cent in the first quarter of FY17. These vehicles (including trucks and buses) accounted for 38 per cent of diesel consumption, by a Nielsen study.