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Auto industry gives thumbs-up to deregulation of diesel prices

"It is great that the government has been able to deregulate the diesel prices. Now the prices of petrol and diesel would move together and there won't be any distortion," the Maruti Suzuki India Chairman said.

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Updated:October 19, 2014, 5:07 PM IST
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Auto industry gives thumbs-up to deregulation of diesel prices
"It is great that the government has been able to deregulate the diesel prices. Now the prices of petrol and diesel would move together and there won't be any distortion," the Maruti Suzuki India Chairman said.

New Delhi: Auto industry on Sunday welcomed the government's move to deregulate diesel prices, saying the clarity on fuel prices would help the manufacturers plan for future products and investments in a better way.

"It is great that the government has been able to deregulate the diesel prices. Now the prices of petrol and diesel would move together and there won't be any distortion. It will help the auto manufacturers to plan for future products and investments in a better way," Maruti Suzuki India (MSI) Chairman RC Bhargava said.

On Saturday, in a much-awaited reform, the government deregulated diesel prices that resulted in a price cut of Rs 3.37 a litre. Retail rates of the fuel will now reflect international movement in oil prices. Commenting on the development, Hyundai Motor India Ltd Senior Vice President (Sales & Marketing) Rakesh Srivastava said having clarity on fuel pricing is going to be good on overall industry in terms of planning for new models and investment capacity.

"From a customer's point of view also, any clarity is also good for them to take decision as cost of ownership is one major deciding factor for acquisition of a new car.

"The price differential between petrol and diesel was artificial due to diesel being subsidised. If the difference were to stay between less than Rs 10 after this deregulation, then contribution of diesel vehicle on overall industry sales could be between 30-40 per cent," he added.

Honda Cars India, Senior Vice President, Marketing and Sales, Jnaneswar Sen termed the development as a reform in the right direction. "Now customers can decide their car's fuel type depending on their user requirement. Moreover, this will help ease the fiscal deficit of the country," he added. Renault India Country CEO and MD Sumit Sawhney said the deregulation of diesel prices will enable a substantial reduction in government subsidy, thereby reducing the overall burden on the budget with positive returns to the exchequer.

"...From the automobile industry perspective, the expectation is that government will continue to look at such pro-business policy intervention with a long-term view to positively impact the economy and directly benefit the consumer," he added.

Echoing similar sentiments, General Motors India Vice President P Balendran termed the decision as a positive move for the overall economy. "This will help government manage its finances better. If diesel prices come down, transportation cost will also come down and that will have an effect on the prices of products that will help in bringing down inflation. When the overall economy improves, the auto industry will also benefit from it definitely," he added.

Toyota Senior Vice President (Sales and Marketing) N Raja said the Japanese car maker welcomes the government's decision to deregulate the price of diesel especially in the time of festive season.

"This is good for the consumers as they can now decide the car type, based on their preference and utility. The auto industry is witnessing a positive momentum and this step will further add to the upswing of the industry," he added.

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