Petrol cars run the streets in FY23 amid EV play

Petrol-powered vehicles still account for more than 70% of the total passenger vehicle sales this fiscal

India had its watershed moment when it comes to alternatively powered vehicles in FY23. However, they are eating into the share of diesel passenger vehicles (PVs) instead of petrol and CNG-run vehicles. Petrol-powered vehicles still account for more than 70 per cent of the total passenger vehicle sales this fiscal and diesel vehicles make up 18.5 per cent.

The main reasons for growth in petrol passenger vehicle sales are price parity between diesel and petrol, along with the introduction of petrol hybrids as well as more model launches which have a petrol-only option.

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In the last five years, the contribution from petrol model sales has gone up from 60 per cent to 70 per cent. CNG models comprise 10 per cent of PV sales and electric vehicles contribute to 1.3 per cent.

In 2018-19, CNG sales were at 3.8 per cent while electric vehicles had not taken off yet, as per Jato Dynamics estimates.

"Petrol is the primary choice for cars, entry-level and mid-sized SUVs largely driven by the usage pattern and operating economics based on distance travelled. For larger SUVs, the diesel proportion continues to be high as the operating economics works best here," Veejay Nakra, president, automotive, Mahindra & Mahindra told The Economic Times.

With tightening emission regulations and the decreasing gap between diesel and petrol prices, fewer auto companies have launched or upgraded their diesel models. Moreover, diesel vehicles have to be scrapped after a decade in the Delhi NCR. Petrol vehicles have to be done away with after 15 years.

Diesel car sales accounted for 36 per cent of PV sales in 2018-19, but now make up only 18.5 per cent.

There have been 13 petrol car launches this fiscal, while eight electric vehicles have been launched, followed by six diesel vehicles, and one CNG vehicle.

Nakra told ET, "There is certainly category creation happening in EVs. With improved affordability, reduction in battery cost over time, more models and better charging infrastructure, the penetration in EVs will see an increase."

Meanwhile, the SUV trend continues in India, with long waiting time for some models being balanced out by discounts on others.

Shashank Srivastava, executive director, Maruti Suzuki told the publication, "Higher cost of alternative fuel vehicles and the friction points around the availability of wider choice, charging infrastructures is leading to a classical chicken and egg problem. We have seen a significant shift in the petrol vs diesel mix with hybrid technologies being more popular."

Tata Motors, market leader in the emerging segment, has the most expansive portfolio of electric vehicles and expects a 20 per cent contribution to its overall passenger vehicle portfolio by 2027-28.

Car prices, meanwhile, have gone up significantly by nearly 25.4 per cent in the last three years forcing buyers to review their choice.

As per economic fundamentals stress like higher inflation, rising rates of interest, and slower growth will reduce disposable income and thus lower the inclination to spend on products such as cars, experts believe.

The PV industry is however poised to end FY23 with record sales of nearly 3.9 million units, which is a 26 per cent growth over FY22, and an improvement on the previous high of 3.37 million units in FY19, all due to strong petrol vehicle sales.