Petrol, diesel price hike to affect automobile sale in near future: Experts

Published: 20th June 2020 09:05 PM  |   Last Updated: 20th June 2020 09:05 PM   |  A+A-

Petrol, Fuel

Image for representational purpose only ( File/ EPS)

Express News Service

NEW DELHI: Petrol and diesel prices in India have again been increased on Saturday- the 14th consecutive day of price hike that has pushed diesel rates to record highs. Experts feel this spurge has the capacity to dent demand for automobiles in near future. 

"Rising fuel prices may further delay the consumer’s decision of purchasing an automobile. Consumer sentiments have remained low since the past 4-5 quarters now, which is evident in the falling automobile sales numbers of CV, PV segments and 2 & 3 wheelers, where the latter performed marginally better than the former two," Vahishta Unwalla, Research Analyst at Care Ratings told TNIE. 

Unwalla added that while the household expenditure is already on a dip in the present times, the consumer may not wish to further elevate his expenses in such a scenario- which fears job losses and a falling income. Therefore, rising fuel prices is expected to act as a key pain point for the automobile sector in the short term, she said. 

Due to the shutdown of automobile dealers in large markets for almost 30-40 days amid coronavirus outbreak, Q1-FY21 will be the worst hit quarter. Many analysts fear that auto sales may dip 50-60 per cent in the first half of FY 21. The sector has been facing slowdown for nearly two years now because of slowdown in economic activity and rising selling prices. 

"Rising in oil prices, pressure to boycott Chinese imports and most importantly Covid-19 slowdown challenges is surely weighing in on our future plans. Rising oil prices not only impact consumer sentiments but also makes logistics and supply chain more expensive," said a senior executive of a Japanese auto company. 

India's automotive industry is highly dependent on China for the import of parts. Experts fear a curb on the same may dent operations of auto manufacturers based in India. 

"Due to the growing tensions between India and China, the automobile sector fears future sourcing of raw materials as China remains one its top suppliers," Unwalla said. 

Coming to oil prices, Petrol and diesel on Saturday was retailed at ₹78.88/litre and ₹77.67/litre respectively in Delhi. Petrol and diesel prices have increased by ₹7.62/litre and ₹8.28/litre respectively since June 6 in Delhi.

When crude oil prices had touched record low in March, the government had hiked excise duties by a record ₹10 per litre for petrol and ₹13 per litre for diesel. Since then, global crude prices have gone up, but are yet below the pre-coronavirus levels.

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