India’s road transport minister on Tuesday warned local and foreign automakers to either cut production of polluting diesel vehicles or face higher taxes and levies, setting alarm bells ringing in the world’s third-largest car market.
Here are some facts about India’s automotive market, the biggest after China and the United States, where players such as Maruti Suzuki, Tata Motors and foreign giants such as Mercedes and Volkswagen operate.
GASOLINE (PETROL) VEHICLES:
In India, about four million passenger vehicles were sold in the fiscal year that ended in March, according to data from the Society of Indian Automobile Manufacturers.
Petrol vehicles have been the top sellers in recent years – increasing their market share to around 68.4% in January-July 2023 from 42.5% in 2014, according to data from automotive market intelligence provider JATO Dynamics.
Cost-conscious Indians are preferring to buy petrol cars as they are cheaper than diesel, even though diesel cars offer better fuel efficiency.
In the luxury segment, though, which includes cars and SUVs made by Mercedes, BMW and Audi, petrol variants have accounted for 62% of sales so far this year, down from 68% in 2021, according to JATO Dynamics.
Tuesday’s warning from minister Nitin Gadkari targeted diesel carmakers, whose market share has seen a steady decline to nearly 18% of passenger vehicles in January-July this year from 47.9% in 2014.
But when it comes to luxury cars, diesel variants remain in vogue, with their market share rising to 33% so far this year from 31% in 2021.
Many private taxis, as well as many utility vehicles and trucks in India, still run on diesel, as their owners prefer fuel efficiency.
Among automakers, Mahindra and Mahindra has the highest diesel car market share with 47% of unit sales so far this year, up from 28% in 2021. Hyundai, with 15.4%, is second and Kia third with 12.7%, according to JATO Dynamics
ELECTRIC VEHICLES, NATURAL GAS:
Electric vehicles (EV) accounted for just 2.4% of India’s car sales in January-July, but the government wants them to reach 30% by 2030.
India’s nascent EV market is led by Tata Motors. Tesla has for weeks been thinking about entering the market, though a lack of charging infrastructure and India’s price-conscious consumers remain a challenge.
Vehicles that run on compressed natural gas, or CNG, mostly preferred by cab operators in India, have seen their market share rising to 11.4% in January-July from 9% in 2014.