Love diesel cars? See what is set to happen soon

With price differential between petrol and diesel narrowing and a host of other factors, the demand for diesel passenger vehicles (PVs) is expected to decline to below 25% post implementation of BS-VI norms, which will happen by April 2020. The share of diesel vehicles, which declined to 38% in the financial year 2018, is expected to fall further to an estimated 35-36% in fiscal 2019 and will eventually go lower with several factors contributing towards the decline, said a report by Icra released on Thursday.

Since 2013, the retail price gap between petrol and diesel has significantly narrowed. Besides, given the superior fuel economy of hybrid cars, hybridisation has also reduced the importance of diesel models.
The implementation of BS-VI norms will also significantly widen the cost differential between petrol and diesel cars, leading to the eventual decline in the share of diesel vehicles, according to the report.

In another report by PeopleStrong, the Indian auto industry is set to witness a revival in this fiscal with the industry seeing an increase of about 8-12% in hiring numbers compared to last year.
Though this number is not encouraging, it is a reflection of brighter prospects for individuals looking for employment opportunities in the auto sector. 

A majority of hiring is expected to happen in the research and development segment of the auto industry, wherein the focus would be in the areas of design, engine and fuel side. Compared to last year, this segment is expected to see an increase of about 12-15%.

Subrata Ray, sr group vice president, corporate sector ratings, Icra, said original equipment manufacturers (OEMs) will invest in diesel technology to comply with BS-VI emission norms, but incremental capacity addition in diesel engine is likely to be limited.

Once BS-VI emission norms come into force from April 2020, the required changes/additions will result in a price hike of about Rs 75,000 for a diesel car as compared to relatively modest Rs 20,000 in the petrol car (primarily for direct injection system).

Currently, a diesel PV is priced about Rs 90,000-100,000 higher as compared to its petrol counterpart.
But with the advent of Euro-VI norms, this gap will increase to Rs 150,000-175,000, thereby further reducing the advantage of higher fuel efficiency.

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Small car buyers will, therefore, find diesel cars uneconomical due to higher break-even. But sports utility vehicles (SUVs) will continue to be dominated by diesel, though their share too will reduce to sub-60% level over the next four years from over 80% at present.

Source: DNA Money