India (Commonwealth) _ India’s road transport minister advised domestic and foreign manufacturers to either reduce output of polluting diesel vehicles or face increased taxes and levies, raising alarm bells in the world’s third-largest automobile industry.
Here are some statistics about India’s automotive market, which is the third largest after China and the United States, and where companies like Maruti Suzuki, Tata Motors, and multinational behemoths like Mercedes and Volkswagen operate.
According to estimates from the Society of Indian Automobile Manufacturers, around four million passenger automobiles were sold in India during the fiscal year that ended in March.
According to data from automobile market intelligence firm JATO Dynamics, gasoline vehicles have been the leading sellers in recent years, raising their market share to about 68.4% in January-July 2023 from 42.5% in 2014. Even though diesel cars offer superior fuel efficiency, cost-conscious Indians prefer to acquire petrol cars because they are less expensive.
However, in the luxury class, which includes Mercedes, BMW, and Audi vehicles, petrol types have accounted for 62% of sales so far this year, down from 68% in 2021, according to JATO Dynamics. Nitin Gadkari’s warning targeted diesel carmakers, whose market share has steadily declined to about 18% of passenger vehicles in January-July this year from 47.9% in 2014.
However, when it comes to premium vehicles, diesel variants remain popular, with their market share increasing to 33% this year from 31% in 2021. Many private cabs, utility vehicles, and Lorries in India continue to run on diesel because their owners favor fuel economy.
Mahindra and Mahindra has the greatest diesel car market share among manufacturers, with 47% of unit sales so far this year, up from 28% in 2021. According to JATO Dynamics, Hyundai is second with 15.4% while Kia is third with 12.7%. Electric vehicles (EV) accounted for only 2.4% of India’s automotive sales from January to July, but the government hopes to increase that to 30% by 2030.
Tata Motors is the market leader in India’s embryonic EV sector. Tesla has been considering entering the market for some weeks, while a shortage of charging infrastructure and India’s price-conscious consumers remain obstacles. CNG-powered vehicles, which are generally preferred by cab drivers in India, increased their market share to 11.4% in January-July from 9% in 2014.
India, one of the world’s fastest expanding oil markets, has lagged behind major economic rivals in Europe and Asia in terms of EV adoption, but sales are already rising up, and investment in new automobiles and energy infrastructure is increasing.
According to several analysts and industry participants, India’s gasoline consumption will peak sooner than previously assumed, requiring leading oil businesses to accelerate transition plans to alternate business lines, particularly increasing petrochemical manufacture.
We expected peak gasoline consumption to be around 2040-2045 before, but based on the trend and the speed with which we are establishing the ecosystem around EVs, peak demand would be in the mid-2030s. According to Debasish Mishra, Partner, energy, resources, and industrials at Deloitte India. He anticipates that diesel demand would peak about the same time as gasoline demand.
Slowing fuel consumption will be noticeable by 2030 as EV technologies stabilize, compared to an earlier forecast of the 2040s, according to an industry source at an India-based refinery.
According to the insider, who declined to be identified because he is not authorized to speak to the media, refiners are already investing in petrochemical integration to compensate for the probable drop in gasoline consumption. According to him, China now meets over 90% of Indian petrochemical demand, therefore a shift by Indian refiners toward domestic chemical demands might substantially alter supply dynamics.
