Economy

Amid rising fuel prices, cars with lower running costs likely to gain higher traction among buyers: Report

PTI New Delhi | Updated on October 16, 2021

For a compact passenger vehicle, fuel now accounts for 40 per cent of the life-time cost compared to 30 per cent in mid-2020

With fuel prices going up by 35 per cent over the past 15 months, thereby impacting overall vehicle running costs, cars that have higher fuel efficiency and lower maintenance costs are expected to gain higher traction among buyers in India, especially in the sub-₹10 lakh category, according to a report by HSBC Global Research.

Considering the fact that 70 per cent of the passenger vehicles market in India is still accounted for by vehicles costing less than ₹10 lakh, the development augurs well for market leader Maruti Suzuki India Ltd (MSIL), said the report.

“Over the past 15 months, fuel prices have gone up 35 per cent, impacting overall vehicle running costs...Our channel interactions suggest that customers are increasingly becoming considerate of the recent rise in fuel prices,” it said.

40 per cent of life-time cost

Citing the example of Maruti Suzuki’s Swift petrol, the report said that for a compact passenger vehicle, fuel now accounts for around 40 per cent of the vehicle’s life-time cost compared to 30 per cent in mid-2020.

Also see: Petrol, diesel price hiked again; diesel nears ₹100-mark in Goa, Bengaluru

“In the current environment, we believe cars that have higher fuel efficiency and lower maintenance costs should gain relatively higher traction among buyers, especially in the less than ₹10 lakh category, which is still 70 per cent of the market in India,” it said.

MSIL remains market leader

Stating that MSIL continues to score well in that regard, HSBC Global Research said, “In our analysis, both in absolute terms and relative to competition, MSIL remains the market leader in fuel efficiency and total cost of ownership (COO).”

Also see: Passenger vehicles sales decline 41% YoY in September

MSIL’s competitive positioning should remain compelling given the fact that it has around 65 per cent market share in the less-than-₹10 lakh price category, it added.

The report also pointed out that MSIL’s fuel efficiency has improved by 15–30 per cent in the past 10 years, citing the example of fuel efficiency of Swift or Swift Dzire, which changed from 18 km per litre (kmpl) 10 years ago to 23.3 kmpl now.

Published on October 16, 2021

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