Vishnu Mathur, Director General, SIAM, talks to B&E about what automakers feel about the trend towards dieselisation
B&E: The market dynamics in relation to petrol-powered and diesel-driven cars is changing in favour of the latter, mainly due to the big price differential between the two fuels. How does the automobile industry view this shift?
Vishnu Mathur (VM): The government should provide some more clarity with respect to the pricing policy of both the fuels so that automobile companies can plan accordingly. One of the biggest challenges for the automobile industry this year is how to judge the future price movement of diesel and petrol.
B&E: Will it be a more desirable thing for the automobile industry if the price disparity between diesel and petrol is reduced?
VM: Clearly, there is a need to bring some parity between petrol and diesel prices. The government should focus on reducing the price differential between petrol and diesel because if it continues to widen, it will not be good for the industry and the overall economy. At this point in time, diesel is very artificially priced and it cannot hold on forever. There is a need to implement a step by step program to rectify this scenario. As per our study, out of the total diesel consumption in the country, only 13-15% is consumed by the farmer community for which diesel is subsidised. What is happening in the process of taking care of this 15% is that the fuel is getting subsidised for the other 85% as well. The biggest question in front of the government today is how to take care of this 15%.
B&E: However, considering the fact that diesel will continue to be cheaper than petrol even in future as the government may prefer to keep it subsidised at some level, do you believe it is better for the industry to sell more diesel cars in the long run?
VM: Diesel is the future technology. Not only because of the fact that it is cheaper and more fuel-efficient than petrol. If oil companies can invest in new technology for this fuel and lower the sulphur content, cleaner diesel technology will be beneficial for all. Even though the percentage difference in the prices of petrol and diesel hasn’t changed much, it is only during the past one year that the market scenario has become such that the demand for diesel cars have gone up substantially.
B&E: The market dynamics in relation to petrol-powered and diesel-driven cars is changing in favour of the latter, mainly due to the big price differential between the two fuels. How does the automobile industry view this shift?
Vishnu Mathur (VM): The government should provide some more clarity with respect to the pricing policy of both the fuels so that automobile companies can plan accordingly. One of the biggest challenges for the automobile industry this year is how to judge the future price movement of diesel and petrol.
B&E: Will it be a more desirable thing for the automobile industry if the price disparity between diesel and petrol is reduced?
VM: Clearly, there is a need to bring some parity between petrol and diesel prices. The government should focus on reducing the price differential between petrol and diesel because if it continues to widen, it will not be good for the industry and the overall economy. At this point in time, diesel is very artificially priced and it cannot hold on forever. There is a need to implement a step by step program to rectify this scenario. As per our study, out of the total diesel consumption in the country, only 13-15% is consumed by the farmer community for which diesel is subsidised. What is happening in the process of taking care of this 15% is that the fuel is getting subsidised for the other 85% as well. The biggest question in front of the government today is how to take care of this 15%.
B&E: However, considering the fact that diesel will continue to be cheaper than petrol even in future as the government may prefer to keep it subsidised at some level, do you believe it is better for the industry to sell more diesel cars in the long run?
VM: Diesel is the future technology. Not only because of the fact that it is cheaper and more fuel-efficient than petrol. If oil companies can invest in new technology for this fuel and lower the sulphur content, cleaner diesel technology will be beneficial for all. Even though the percentage difference in the prices of petrol and diesel hasn’t changed much, it is only during the past one year that the market scenario has become such that the demand for diesel cars have gone up substantially.
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