Car makers rush to launch diesel models

New Delhi, July 24: Auto makers are pulling out all the stops to meet the increasing demand for diesel cars by launching models and increasing plant capacities. Diesel cars are set to account for 40 per cent of all passenger vehicles being sold in the country.

General Motors India, which is launching the diesel variant of its Chevrolet Beat on Monday, plans to introduce similar variants of its other models — Spark, Aveo UVA and Aveo sedan.

“There is always an interest in putting diesel in other segments,” said Karl Slym, president and managing director of General Motors India, recently.

Analysts said luxury car maker Mercedes India was also planning to launch its C-Class and E-Class cars with smaller diesel engines.

“Currently, the demand for diesel car stands at 30-35 per cent, which is expected to gear up substantially over the next few months,” Abdul Majeed, auto analyst with PwC, told The Telegraph. Over the last two months, 6-7 of every 10 customers planning to buy a car have opted for a diesel variant, he added.

Sales of diesel vehicles have experienced a compounded annual growth rate of 22 per cent between 2005-06 and 2008-09, while for petrol it was 12 per cent, clearly highlighting the shift in preference.

“Despite diesel vehicles being priced higher than comparable petrol models (around Rs 1 lakh higher), their higher fuel efficiency means lower running cost, which is attracting customers,” said Majeed.

To cash in on the increased demand, Italian automobile major Fiat has started to offer its diesel-powered Punto and Linea at the same price as its petrol-powered vehicles.

“With the rise in petrol prices, diesel cars make for an even more attractive proposition,” said Rajeev Kapoor, president and chief executive, Fiat India.

Country’s top car maker Maruti Suzuki is launching the new Swift in the 1.3-litre diesel variant. With 6-7 of 10 Swift cars being sold with a diesel engine, the auto maker expects the new model to continue to drive higher volume growth.

Detroit-based Ford Motor is also increasing its focus on diesel cars.

“For our upcoming products the focus will be more on the diesel variants,” said Nigel E. Wark, executive director (marketing, sales and service), Ford India.

The company plans to launch eight models in the country by 2015.

“While demand is increasing steadily, auto manufacturers will need another 6-10 months to build adequate production capacity,” said Majeed.

While Ford India and Maruti Suzuki plan to ramp up production over the next few months, GM India said it had enough capacity to meet the new demand levels.

Meanwhile, the Society of Indian Automobile Manufacturers (Siam) has lowered its 2011-12 growth forecast for cars to 10-12 per cent from an earlier estimate of 16-18 per cent.

Car sales had surged 30 per cent in 2010-11, the highest growth rate since 1999-2000