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Right from a peak of 54% in 2012; Diesel Cars penetration fell to 33% in 2019!
Do note that Diesel as a fuel was highly subsidized in 2012; the price difference of diesel over petrol was as high as 70% that time!
Having a diesel model in portfolio was extremely necessary for the OEMs to be successful in the Indian market. Even the likes of Honda who had only Petrol powered cars; had to launch diesel option in 2013. Honda launched the Amaze with diesel engine option in 2013 owing to the customers preference.
However; the government reduced the subsidy on the diesel over the years. This led to the narrowing price gap in petrol diesel price.
Low price difference between petrol v/s diesel and low running cost of diesel was not good enough to offset higher purchase cost of diesel cars over petrol ones.
With the influx of BS6 technology; the cost of manufacturing a BS6 diesel shot up extremely high and many manufacturers moved away from Diesel.
The diesel vehicle penetration is going to even dip much further in 2020; as Maruti & Renault have moved to Petrol only portfolio. Pl note that Maruti alone had sold 3,34,191 diesel cars in 2019 (out of 9,69,159 diesel cars sold). Link
So; what is the fate of Diesel Cars? –
Diesel will still be the preferred choice for large MUV and SUV buyers owing to the higher torque and grunt available in Diesel Cars. That’s why Mercedes was one of the first companies in India to bring a BS6 diesel.
Customers will be resilient to buy small cars with diesel as they’ll be higher priced than the petrol variants. Slowly smaller cars shall give away diesel engines.
Innovation will be key – If OEMs could match Diesel Variants with Petrol counterparts; it shall work wonders! That shall be the perfect recipe to fight market leader Maruti as well.