Future for Diesel Cars in India.

A Report By: Economic Times Mumbai; Date:2009 Feb 22
Written by: John Sarkar

Forget gas. Diesel seems to be the fuel of the future with new launches planned globally. Now prices of diesel too could also go down and car makers are betting big on the Indian market. John Sarkar talks about the road ahead

ON a squally September morning in 1913, a steamer named Dresden discovered a decomposed corpse floating in the English Channel. It belonged to Rudolph Diesel, the creator of the first diesel engine. Till date, nobody knows how or why Diesel died under such mysterious circumstances. But what people know is that Diesel spent his entire life trying to create a thermodynamically efficient engine, the engine that experts say is slowly changing the way people drive today.

Sample this: Four of the top ten models sold in the world are diesel powered. More than half the personal vehicles sold in Europe today are diesel powered. Diesel vehicles sales have grown 80% since 2000 in the US. Then in Japan, the government has also started to look at promoting diesel cars back on to the roads. And if that wasn’t enough, India too is now ready for the diesel overhaul.
Agrees Pawan Goenka, president, automotive sector, Mahindra & Mahindra (M&M). “The demand for diesel cars in India is rising,” he says. “This is logical since diesel engines are highly efficient and consume about 30% less fuel than similar sized petrol engines.” Put another way: One litre of petrol is roughly equivalent to 700 ml of diesel, which makes it the choice of millions of priceconscious car buyers.

Goenka also feels that the availability of a larger number of vehicles with contemporary diesel engines will accelerate the trend. “Notably more diesel Logans are sold than petrol Logans despite a significant price differential,” he says. “We believe this is true also for the Tata Indica and Indigo. Maruti has also joined the bandwagon with its 1.3 litre diesel engine in the Swift range, which has reportedly done well.”

This is significant because traditionally India has been a petrol-car market with around 80% of the cars sold here being petrol cars. But now the scenario is changing fast with a host of carmakers lining up new dieselpowered models and variants. Says Dilip Chenoy, director general of Society of Indian Automobile Manufacturers (SIAM), “Diesel engines are now becoming smaller and more frugal.” Chenoy is referring to the GM-Fiat 1.3 multijet oil burner that powers the Suzuki Swift. And today not coincidentally, Maruti’s sales are skewed 60:40 in favour of diesel in the categories where it is present with diesel cars.

But not one to rest on its laurels India’s largest carmaker is also planning to launch a diesel variant of its C-segment contender, the SX4. When contacted, a Maruti spokesperson refused to comment on future launches. But talking about launches there is Toyota as well, which is lining up a diesel Altis for the Indian market. Then Korean carmaker Hyundai has also confirmed the launch of a diesel i20 later this year. Similarly, Italian-carmaker Fiat also has a couple of launches up its sleeve. But if you thought that these are the only firms to believe in the power of diesel, you are wrong!

Companies such as, Ford, Honda, General Motors, Skoda, Toyota, Audi, Porsche and Mercedes-Benz are also bullish about the potential of the diesel-car segment. Says Michael Boneham, president & MD of Ford India, “Around 70% of the cars that we sell here are diesel powered. The demand for diesel cars has been steadily increasing over time. For instance, the 1.4 Duratorq engines that we have been importing from Europe are now being made locally in Chennai. A part of the $500 investment that we earmarked for India is being used for this.” And Ford apart, even the fat-cat segment of the automobile market is reaping the benefits of Diesel’s invention. Sample this: Diesel cars account for around 50-60% of Mercedes-Benz’s total sales in India. Then for Germany-based premium carmaker Audi, diesel cars constitute about 75% of their sales in the domestic market. And now Porsche, the maker of some of the world’s best sportscars, is also planning a foray into the diesel segment with a oil-burning variant of its popular SUV, the Cayenne.

So, what sparked the trend? What prompted a carmaker such as, Honda, a firm believer in petrol engine technology, to launch a i-DTEC (diesel engine) abroad? The answer comes from Benoit Tiers, MD of Audi India. “The original diesel engine has changed comprehensively during the last decade,” Tiers explains. “What a customer had in mind when thinking of a diesel engine doesn’t exist anymore.” What Tiers means is that diesel engines are now no longer considered noisy and polluting. Technological advancements over the last few years have removed these drawbacks and buyers are slowly realising this.

In the Indian context, Ian Fletcher, an auto consultant with UK-based IHS Global Insight feels that part of this is the result of vehicles powered by the 1.3 multijet oil burner such as, the Suzuki Swift, Tata Indica Vista and Fiat Linea. “Although others from Renault, Mahindra, VW Group have also helped, these companies showed Indians that diesel is more efficient. And more companies will also undoubtedly come through as demand continues to rise,” he says.

And then for auto firms planning to showcase their diesel power, the lower cost of diesel is the icing on the cake. Diesel is touted to be clean too. According to M&M’s Goenka, a modern diesel mill emits about 30% less greenhouse gases than petrol and about the same as CNG. Overall diesel emissions including diesel particulates are also down by over 90% from pre-1998 days and diesel is significantly cleaner than earlier with its reduced sulphur content. Says Goenka: “With further tightening of Indian fuel standards concurrent with the introduction of tighter emissions, these will be reduced significantly further.” So it’s time now to wait for the new generation of diesel cars. Logic says it won’t be long.