Thursday, January 10, 2013
By Manoj Kumawat
SIAM favors deregulation of diesel price
It seems that all the factors are in favor of stopping subsidy on diesel and making this fuel price governed by the market. The Society of Indian Automobile Manufacturers (SIAM) has also recently backed the issue and termed the subsidy on diesel to be not feasible. Already, the government mulls over a proposal to hike Rs 10 on diesel price pre litre in a phased manner this year so that the subsidy burden on the government can be reduced. If that happens petrol and diesel prices will have little difference and petrol cars will be as popular as diesel cars. Also, car makers such as Maruti that is thinking of launching the Maruti Alto 800 Diesel could shelve their plans as the petrol model will be selling in the same numbers as the diesel ones.
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In addition to this, the reduction in the price gap between petrol and diesel will step up petrol car sales as people prefer petrol cars for their low maintenance and power. People only prefer diesel cars following low price of the fuel as well as due to high mileage. Compared to a diesel car, petrol car though has high per kilometer running expense if fuel is concerned but it proves to be highly cost effective in the long run. However, these days diesel cars have improved technology in place and diesel cars are as economical in the long run as these are per kilometer.
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Presently, diesel cars such as Chevrolet Beat Diesel or the Renault Duster Diesel and other diesel cars such as the Maruti Ertiga diesel are low maintenance cars and come with extended warranty. Thus the belief that diesel cars require more maintenance is hypothetical. Meanwhile, now the direction of the car industry will largely depend on the decision by the government on the issue and if it goes ahead with stopping subsidies on diesel fuel, car makers will be responding in the same way. If the government continues the status quo, then car makers will be focusing on diesel car launches in the coming years.