Passenger vehicle market leader Maruti Suzuki India, which stopped producing its only set of diesel vehicles, the Vitara Brezza and S-Cross last month, is now banking on petrol versions of these models to push its market share in the SUV segment.
While the Vitara Brezza was unveiled in a 1.5-litre petrol version at the recently concluded Auto Expo 2020, the petrol S-Cross is expected to be launched sometime later.
While the Japanese car major which sells one out of every two cars sold in India currently, its share in the growing SUV segment is 27-28 percent. Shashank Srivastava, Executive Director (marketing & sales), Maruti Suzuki in an interview with Autocar Professional said, " It will give a great fillip to us in terms of market share and volumes."
Maruti Suzuki had announced in April last year that it will exit the diesel vehicle space as upgrading small diesel engines to meet the stringent BS VI emission norms will make it economically unviable. However, the company could still make a re-entry in that space if there's significant demand from consumers.
It is to be noted that Maruti Suzuki has a 1.5-litre diesel engine of its own. Its closest rival Hyundai Motor India has decided to continue playing in the small diesel car market in the BS VI era. And so have Tata Motors, Honda Cars India, and Ford India. Whether Maruti Suzuki decides to return to diesel power will be keenly watched by the industry.
In an interview with Autocar Professional soon after the diesel market exit announcement, RC Bhargava, chairman, Maruti Suzuki had said, ""It (presence in diesel segment) will depend on customer acceptability. It will be the customer's choice, not the OEM's choice."
Offering a perspective, Srivastava reasons that developments in the past few years have made petrol a more attractive option for consumers. The industry share of diesel was about 60 percent around 6-7 years ago as the price difference with respect to petrol averaged around Rs 31-32 per litre. However, due to deregulation of oil prices and other global and local factors the fuel price differential narrowed down gradually. For instance, the price differential between the fuels currently stands at about Rs 6-6.50 in Delhi while in a couple of States the price of diesel is higher than petrol. These have also led to the share of diesel coming down to around 30 percent and further to 25 percent last month. For Maruti Suzuki, the share of diesel cars was about 17 percent.
Offering further insights on the subject, Srivastava points out that the share of diesel in sedans and hatchbacks have been always low while the SUV segment was a key consumer of diesel. Citing the recent examples of the MG Hector, Kia Seltos, Hyundai’s Venue and the Ford Ecosport; Srivastava claims that even in the SUV segment the trend now seems to be changing, especially in the entry and mid levels.
“It does not make economic sense for anybody, unless if someone is using the car for 4,000-5,000km a month, which is not the case. Most consumers use it for about 1,000km a month,” Srivastava adds.
Reason to be cautiously optimistic
Srivastava, who in his role has to track the market very closely, says that the industry has come from negative in H1 to a little positive in Q3 and still better in January. It does give hope about the future but there is a need to be cautiously optimistic. While the full transition to BS VI will take place in a few weeks from now, Srivastava points out that factors which led to the current slowdown – higher cost of vehicles, tightening of financial norms, and confusion over emission norms still continue in the market though.