Stuck in a pothole

The sudden price hikes have left the car buyers thinking.
Stuck in a pothole

The cars market is seeing a shake up with petrol price rise, car makers raising the price and now higher excise duty on diesel cars. There seems to be no alternative left for the car buyers or users than to shell out more money. The pockets of consumers are going to be hit.

Prices riding high

The Indian consumers are being hit from all the areas:

  • Price rise of Petrol – The petrol prices were hiked by Rs 7.50 and later dropped by Rs 2. Current price for petrol is Rs 70.24/Ltr.
  • Car price rise – With the fall in May sales, companies are planning to raise the car prices which again will hit consumers’ pocket.
  • High interest rates
  • Soon hike in excise duty of diesel cars – The government is likely to increase excise duty on diesel cars to neutralise the advantage of the state subsidy on a fuel that is Rs 30/litre cheaper than petrol. The decision on this may be taken before the monsoon session of Parliament begins sometime in July.

According to Petroleum Minister S Jaipal Reddy, there was an immediate need to raise fuel prices. Until June 2010, the petrol prices were decontrolled by the government but since 4 November 2011 the prices have been increasing. The rise has been seen, despite oil price rising by 14 per cent and 7 per cent fall in value of rupee against the US dollar.

Due to subisidies the oil companies have been incurring losses and with rupee value falling the losses would rise. “"If rupee depreciates by one against the US dollar, our oil companies lose Rs 8,000 crore (annually)," said Reddy.

Automakers feel the heat

With all these factors, the sales of four wheelers have dropped down in May 2012. With brands including like Maruti Suzuki, Ford, TVS and General Motors India have seen lowered sales. This has led them to plan a hike in the prices of the cars. In fact, Maruti has also has cut production of some petrol models, including Alto, as sales of such cars have declined due to high fuel costs. The company had recently stopped production of petrol models, including the Alto, M800, A-Star, Estilo and Omni for three days to prevent inventories piling up further.

Consumers Speak

Anil Nakhasi, TV Producer-Director/Political Cartoonist, “The petrol price hike has come as an extra burden, which is unbearable. I am very unhappy with this step by the government. I use a petrol car and this will surely affect my monthly budget. I would appreciate if the government gives us some relief or facilities to overcome this rise in prices from everywhere.”

-Monthly expenditure on petrol: Rs 10,000

-With rise expense will reach - Rs 15,000

Neha Hans, a Chandigarh resident, who’s planning to buy a new car, is now in a fix as to which car she should opt for. “I am really confused as to whether I should buy a petrol car or a diesel car. Both of them are going to be heavy on my pocket as excise duty is rising on diesel cars while petrol is already costlier. Moreover, now that cars have become a necessity, I can’t even let go.”

Neha Sawhney, a PR Manager, “It’s both shameful and ironical. The hike in the petrol price has left the society enraged. It is a tough task for managing the expenses. This has obviously sent shockwaves to the common man who is trying hard to make ends meet in an inflationary environment. This would hike the price of other essential commodities. My expenses have gone up by almost 50 per cent and I have to think about traveling in private vehicle.”

-Monthly expenditure on petrol: Rs 4,000

-With rise expense will reach: Rs 8,000

 

Brands plan

Brands are chalking out various plans to attract the consumers to purchase petrol cars. Brands like Maruti, Tata and Hyundai, after the very day petrol price was hiked, they announced discounts of upto Rs 50,000 specifically on petrol models.

Maruti Suzuki, in the name of their anniversary, announced a discount of Rs 30,000 on their bestselling model, Alto, which has seen a drop of about 5,000 units since the past one year. While Tata is offering discounts ranging from Rs 10,000-Rs 50,000, Hyundai offered Rs 3,000 off on its entire range of petrol cars.

"30:70 is the diesel and petrol ratio of Toyota's offerings. Keeping in mind the hike in petrol price, Toyota is promoting petrol models to the professionals who don't travel long distances, such as school teachers and doctors,” says Sandeep Singh, Deputy Managing Director (Marketing), Toyota Kirloskar Motor Pvt Ltd.

FACT FILE:

Diesel V/S Petrol:

  • Car price: Diesel cars are about Rs 80,000 – Rs 1,00,000 costlier than petrol cars
  • Fuel price: Rs 40.91/Ltr for diesel and Rs 70.24/Ltr for petrol
  • Longevity:
  • Diesel cars are a preferred choice for long distance travelers
  • Petrol cars give out less pollution as the fuel is more purified
  • Diesel cars offer better mileage

 

Sales going down after price hike

Company                   

March’12

May’12           

Maruti Suzuki                                   

90,255

89,478

Tata Motors                          

22,658

20,503

Ford                           

7,201

6,036

General Motors                                

8,005

6,079

Honda Siel                             

7,075

10,334

TOTAL                        

1,35,194

1,20,189

                                                                                              Source: Industry

 

 

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