Steep hike in petrol prices to hit the automobile industry adversely: SIAM

Fearing the sharp hike in petrol prices to hit the automobile industry adversely, the industry body, SIAM has asked the government to reconsider the hike and consider an increase in the prices of diesel instead.

The recommendation is based on the fact that due to the large difference in the prices of petrol and diesel, the sale of diesel cars has gone up whereas that of petrol cars has reduced. This is expected to leave resources meant for petrol vehicle production useless, unless appropriate market oriented policies are put in place. Also the sharp increase in petrol prices will hit middle class customers who mainly own two-wheelers and the small cars.

Hence, SIAM is of the opinion that the government should ‘bite the bullet’ and increase the prices of diesel which will bring it more revenue to the government and will also lead to some level of parity between the two competing fuels.

Passenger car sales in India witnessed the slowest growth in ten years of 3.4% in April 2012. Growth slowed down the most in the entry level segment as the government hiked the excise duty in the Union Budget 2012-13. The car sales have grown by a mere 3.4% in the month, as per data from industry body Society of Indian Manufacturers Association (SIAM). The volume-driven small car segment is the worst hit in April as it crawled by a mere 0.68% y-o-y.  Domestic passenger car sales grew to 1,68,351 units in April compared to 1,62,813 units in the same month last year. In the fiscal 2011-12, car sales in India grew by just 2.19% which was the slowest since 2008-09.