Low priced petrol cars keep step with diesel cars

Amidst the blinding popularity of diesel engine cars, the entry level petrol cars like Tata Nano, Maruti Suzuki Alto and Hyundai Eon are trying to radiate a bit on behalf of the petrol engine.  These cars have raised hopes for the Indian auto industry that has been struck by the rising interest rates and fuel prices. The first signs were seen in February when the monthly sales of entry-level cars or hatchback cars that cost less than Rs. 3.5 lakh crossed the figure of 50,000.

The Vice President of Frost & Sullivan, V G Ramakrishanan stated that the entry-level segment had pulled down the market in 2011 but now the gradual month-on-month increase in sales is helping the market to revive. If the interest rates come down, the market would manage to register a growth of around 8-10% in this fiscal year, he added. Experts suggest that in the last 24 months the interest rates have shot up by 300 basis points and the petrol prices have gone up by Rs. 15 per liter. Because of all this the operating cost for vehicles has increased exponentially and more and more customers are settling for entry-level cars in India than bigger ones. According to an auto analyst of BRICS Securities, Mr. Umesh Karne, since the ownership cost of cars has increased with every passing day; the demand for entry-level cars will increase too as we go ahead.

The low initial and maintenance costs and high fuel efficiency are the key factors that have enhanced the demand for Tata Nano, Hyundai Eon and Maruti Alto. February 2012 saw a boost in sales figures for both Alto and Tata Nano which were almost double to the figures of October 2011 that stood at 15,197 units of Alto and 3,868 units of Nano. Hyundai Eon was launched in the mid-October only and since then has been generating inputs for the expansion of the segment. As indicated by the experts of the auto industry, the demand of the entry-level cars has been pumped-up by the purchasing power pressure, fear of increases duty in the budget, big offers and discounts, new variants and festive season in some part of the country.

 
Chief General Manager of Maruti Suzuki India, Mr. Shashank Srivastava indicated that the upper hatchback segment is maturing very fast as compared to SUV cars and MUV cars or other entry level segment which is anticipated to go big with time and also the growth of entry level segment is in a close linkage with the other segments of the auto industry. Indian car market is currently emerging and has young demographics and at present almost 46% buyers India are the first time buyers and for many years to come the small car segment will continue to get larger. According to Hyundai India’s Sales and Marketing Director Arvind Saxena, due to the availability of a diesel car variant the premium hatchback segment of i20 has grown faster than the entry level segment. During the period of April 2011 to February 2012 the passenger vehicle market has grown by a mere 2.95 percent to 23,25,954 units. The passenger cars have grown by a meager percent of 0.31 to 17,86,249 units. All this has happened after a domestic market growth of around 25-30% in 2010-11 at 19,82,702 units. I recently shared that rising from ashes-Datsun to be brought back to life and Maruti Ertiga MPV arriving on April 11th.