Petrol price hike worries car manufacturers

When newer international car brands are all set to target India as their next destination, fuel prices coupled with high interest on auto loans and inflation in India could dampen their prospects. Meanwhile, increased fuel prices have already pulled down car sales to an extent. The petrol price hike of Rs5 per liter, biggest ever, last week indicates that the petrol versions of cars will the real sufferers. On the other hand, the demand for diesel cars will considerably increase.

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Another factor that is expected to step up avenues for diesel cars by Maruti, Hyundai, Volkswagen, General Motors etc is that the diesel prices are still regulated and there is a considerable gap between the petrol and diesel prices. As per an estimate, car sales in India witnessed a growth of 13.18 percent in April this year which is the slowest in the last 22 months. A higher interest rate on auto loan as well as rising fuel prices are considered to be the factors that had done the damage, said sources. The passenger car segment is said to be the worst hit.

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Even industry majors in India such as Maruti are said to have expressed their concern over the rising fuel prices that could affect the auto industry in India badly. However, experts believe that if things do not change and fuel prices do not stabilize then petrol car sales in particular and overall car industry would receive a severe blow. On the other hand the regular increase in fuel prices has an adverse effect on the psyche of the customer, though for a short-term, who would prefer to refrain from buying cars as he is unable to assess when and where the fuel prices will finally settle. As of now, the extent and intensity of the impact is unknown, but experts believe that for the next two months there would a dip in sales especially for the petrol driven cars.