Options for car buyers after diesel price rise by Rs 10

After grappling with the falling sales, increase in input cost and rising competition last year, the auto industry seems to be heading for new challenges in 2013.

The Oil ministry is set to raise the diesel prices by Rs 10 per litre over the next 10 months. The ministry is planning Re 1 increase per litre every month for the coming 10 months. The government feels that the gradual increase will ease the burden on consumers and will not affect the sales of auto industry.

But it is not just the ministry that is hopeful about the scheme, even SIAM, the Society of Indian Automobile Manufacturers, is quite accepting of this sudden turn of events.

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Indirectly tagging it as a plan for 'the greater good' of everyone, SIAM said that this increase would be of great help in shrinking the large price gap that exists between the prices of petrol and diesel. This, in turn, would help bring the sales of both variants at par with each other.

Only time will tell if this parity will increase sales of petrol cars or decrease diesel car sales. For now, all the signs are pointing to the same thing: the history is repeating itself.

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The common man had to consider his options and look for alternatives when the government de-controlled petrol, and its prices spiralled. Petrol prices shot from Rs 55.87 per litre in December 2010 to Rs 65.64 per litre in December 2011, rocketing to an unthinkable Rs 73.18 per litre in May 2012.

While this happened, the car buyers resorted to the subsidised fuel option (diesel) and there was a sudden spurt in diesel car sales.

As government plans to raise diesel prices, after an increase of Rs 5 in September last year, this option would no longer be as lucrative.

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Now, the safest and the familiar path that lies ahead for car buyers is that of CNG. In fact, Maruti Suzuki recently introduced it flagship hatchback, Alto 800, in this variant.

CNG has been around for quite some time and seems to be a good option for car buyer, as it is low-cost and maintains a friendly relationship with nature owing to its lower and less harmful emissions.

Another option, still in its infancy but holds a massive potential of becoming a great success in the days to come, is of electric automobiles.

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Electric vehicles, at present, are unfeasible as they are costly. However, the whole world has its eyes on them, and it is among the best and the most hopeful options that the future holds.

For now, however, the situation is unclear, just like it has been for the past couple of months, for the world of wheels and wagons. Even the festive season (Diwali), known to bring prosperity and an overwhelming surge in sales, failed to cheer the carmakers.

Apart from the decline in the value of rupee and the dwindling condition of Indian economy, the factor that affected auto industry most was the volatility of fuel prices.

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Once standing apart by a wide gap of Rs 26 per litre, petrol and diesel prices, in the current date, feature a difference of just Rs 20 per litre.

The price difference had changed the ratios of petrol-diesel car sales from 85:15 to 80:20. This, however, may not sustain.

Where these numbers are going to go in future, whether the new price policy will be a boon or bane, and what new arenas are going to open up in the days to come; it is very difficult to predict right now. All that can be done at the moment is to wait and watch.

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