With the government of India increasing the price of petrol and mooting the idea of deregulating the diesel price there are fears among the car makers about the decline in diesel versions. The government’s move will shrink the gap between the prices of these two fuels. Of late there has been a great demand for diesel cars, especially of Maruti Swift [images], Tata Indica [images], and the companies are gaining much on their sale volume due to diesel vehicles. This is echoed by the DGM of Indian Oil Corporation.
The ratio of diesel to petrol which was 5:1 has come down to 4:1 and in Europe it is on rational level with gasoline (2 -2.5 times). In the time span of 8 years the cost of petrol and diesel has seen a big variation. Petrol was Rs29/lit in 2002 and its current price is Rs51.40 while diesel was Rs18 in 2002 and now it is Rs40.10 making a 22% difference. If the government implements the deregulation, the cost of diesel will be Rs45/lit which will still reduce the difference to 12.5%. The car makers are assessing the trend and see a smile over petrol, said the CGM of Maruti Suzuki.