Manufacturers to increase the price of diesel cars

Diesel companies to increase the prices of diesel cars in June 2012

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Carmakers are mulling a slight increase in the price of cars. A depreciating rupee, escalating import costs, increasing inflation and an even stronger demand for diesel cars, there cannot be a better time to push the prices up that wee bit more. Add to all this the discounts that carmakers are having to offer on petrol variants, which btw are not moving out of the showrooms at all and a price hike looks imminent. Expect a 1 to 2 percent increase in the ex-showroom prices of most mainstream diesel cars.

Toyota has already announced an increase in the prices of its diesel variant, and the rest of the pack will not take long to follow suit. Carmakers like Maruti Suzuki and Hyundai have already hinted at increasing the price of their oil burning variants sometime in June. These price hikes, however will be restricted only to the diesel variants. Petrol variants will continue to be sold with a marginal discount in light of the astronomical price of the golden fuel.

Car buyers, especially those willing to buy into the entry level segment are facing a dilemma. A substantial percentage of these buyers had a budget attached to their buying decision. Now the increase in the diesel prices have made all these prospective buyers take a pause and reconsider their buying decision as the corresponding diesel variants for the models of their choice are at least Rs 1 lakh more expensive. This situation is bound to slow down the growth of the auto industry – hitherto one of the sunshine sectors of the Indian growth story.

The government, on the other hand doesn’t seem to be bothered at all. There is a buzz that our able leaders are contemplating an additional duty on diesel cars to balance the situation. The decision sounds akin to someone trying to deflate another tyre on the same axle in case of one flat tyre so as to smoothen his ride for the rest of the journey. What a wonderful thought!

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