Government's decision on diesel car tax might impact many

The upcoming budget session in March could be a turning point for many car manufacturers. The one to top the list would be Maruti Suzuki India whose major investment plans are largely dependent on the Government’s take on the diesel cars. Most of the market experts seem to believe that the Government might impose an additional tax on the diesel cars in India. Pawan Goenka, the president of Farm and automotive sector of Mahindra and Mahindra believes that the raise in the tax on diesel cars looks more than probable this time. Ever since the petrol is offered at unsubsidized rates in the country, the petrol prices have gone beyond control. The difference between the petrol and the diesel fuel which earlier stood at Rs 10, widened to over Rs 25.

Quite naturally, the consumers started opting for the diesel driven cars over the petrol siblings to get the budget under control.  The pace at which the diesel car sales surpassed the petrol cars is unbelievable. While the overall diesel car sales grew by 25%, the petrol car sales observed a downturn with a negative growth by 16.5%. The diesel variants of the Maruti Swift, Ford Figo or Chevrolet Beat which are offered in both fuel variants, outsell the petrol cars by far to make up for 85% of the overall car model sales. Moreover, the huge demand of diesel cars has pushed the Maruti Swift waiting period to around nine months, while the Maruti Swift Dzire compact sedan is not spared with any lesser wait time. Now, Maruti India does have certain plans to ramp up their diesel powertrain production. By sourcing diesel engines from Fiat, the auto major hopes to set up a new diesel powerplant.

But, there are a lot of ifs and buts that go into the Maruti India’s decision. There is no question of a new set up when the diesel car demand is likely to die soon. The consumers might as well find it better to bear the high running costs of the petrol car rather than putting a high pressure on their pockets to pay for the relatively costlier diesel cars and an additional tax on top of that. There is another way of looking at things. The car manufacturers like Mahindra and Mahindra, Renault India and Hyundai India who fill their pockets with outrageous diesel car sales will have a new cause for worry. They will have to watch out and take the necessary action before everything goes haywire.

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