India’s Clampdown On Diesel Cars: A Green Transition Or Market Shakeup?

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  • The nation is witnessing a marked shift towards petrol vehicles and harbours ambitious plans for the electric vehicle segment. 
  • Dive into the evolving dynamics of India’s vibrant automotive market and discover how top brands align with the shifting tide.

Amid escalating efforts to curb pollution levels, India’s road transport minister Nitin Gadkari issued a stern warning to both local and international auto manufacturers on Tuesday, urging them to reduce production of polluting diesel vehicles or brace themselves for elevated taxes and levies. This development has resonated with alarm across the world’s third-largest car market, where dominant players include indigenous firms like Maruti Suzuki and Tata Motors and international behemoths like Mercedes and Volkswagen.

In the recent fiscal year, concluding in March, India witnessed sales of around four million passenger vehicles, according to data from the Society of Indian Automobile Manufacturers. Petrol vehicles have overshadowed their counterparts, capturing a substantial market share of approximately 68.4% from January to July 2023, a significant leap from 42.5% in 2014, as per JATO Dynamics. This preference stems from the economic considerations of Indian consumers who favour the affordability of petrol vehicles despite the fuel efficiency that diesel cars offer.

The luxury sector paints a different picture, with petrol variants witnessing a slight dip in sales, accounting for 62% this year compared to 68% in 2021, as detailed by JATO Dynamics. Brands like Mercedes, BMW, and Audi dominate this segment.

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Focusing on diesel vehicles, the declining trend persists, marking a market share of about 18% from January to July this year, a drastic fall from 47.9% in 2014. Despite this, the luxury segment appears to embrace diesel variants fervently, with market shares escalating to 33% this year. Due to its fuel efficiency, diesel remains the choice for utility vehicles, trucks, and private taxis. The segment is led by Mahindra and Mahindra, boasting a 47% market share in diesel car unit sales this year, followed by Hyundai and Kia.

Venturing into the future, the government envisions a robust electric vehicle (EV) market, targeting a 30% market share by 2030, up from a mere 2.4% in the current year. Spearheading this emerging market is Tata Motors, with Tesla mulling over making a grand entry. However, the proliferation of EVs faces challenges, including inadequate charging infrastructure and the price-sensitive nature of Indian consumers. Compressed natural gas (CNG) vehicles, largely favoured by cab operators, have also experienced a surge in market share, reaching 11.4% this year from 9% in 2014, portraying a diversifying automotive landscape in India.

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