NEW DELHI: Delhi has become the fifth-largest market in passenger vehicle sales, pipping Kerala, where sales have dampened as remittance income gets dented due to the challenging economic conditions in the Middle East owing to low crude prices.While sales in Kerala grew about 2% to 1,95,400 units in FY16, Delhi registered sales of as many as 1,99,400 vehicles.
“Low crude prices challenged the Middle eastern economies are affecting a large population of workers coming from Kerala and the remittances they send back home, cutting down disposable incomes and thereby vehicle sales in the state,” explained Rakesh Srivastava, senior vice-president (sales & marketing), Hyundai Motor India. The market for passenger vehicles in Delhi grew by over 9% in FY16.
While sales of passenger cars in the national capital grew by over 12% last fiscal, those of utility vehicles went up by 1.5%. The debate over diesel cars triggered by the ban put in place by the Supreme Court saw a shift to petrol-powered passenger cars demand in Delhi burgeon. “After the ban on sale of larger diesel vehicles came into effect mid-December last year, there was a sharp shift in consumer preference towards petrol versions,” said Jnaneswar Sen, senior VP, (marketing & sales), Honda Cars India. Data show petrol vehicles accounted for 57.8% of total passenger vehicles sold across the country in the fourth quarter of FY16, compared to 55.9% registered prior to the ban coming into effect on December 16, 2015.
Preference for petrol vehicles touched a new five-year high of 56% at the end of FY16. The share of petrol vehicles in overall passenger vehicles sold in the country increased even more since to 60.4% as of July this year.
The steady whittling down of the price difference between petrol and diesel over the years pushed the shift towards petrol. The price gap between petrol and diesel has narrowed to Rs10-12 from the FY12 peak of Rs26.
The diesel vehicle ban in NCR, the largest vehicle market in India, accounting for over 12% of the country only accelerated that shift, industry players said. “The category of vehicles whose registration was banned accounts for a small percentage of the overall passenger vehicle market in Delhi. What played a role in Delhi breaking into the top five markets were the challenges in Middle East, which have been affecting the expat population of Kerala,” said VG Ramakrishnan, managing partner at Avanteum Advisors LLP.
ET View: Need long-term solutions
The clampdown on diesel vehicle sales was plain unwarranted. Particulate matter (PM) is certainly an issue but vehicular emissions account for only a tiny part of the overall problem of pollution. We need to better tackle the far bigger sources of PM like road dust, construction sites, coal fires and the like, and proactively revamp public transport to discourage plying of private vehicles. And even as we aim to fast-forward Bharat Stage VI automotive fuels, we do need to enforce BS IV norms nationally without further delay.