The Indian branch of Hyundai Motor Co. has revealed that they are still waiting to decide whether they should build a factory specific for making diesel engines. They have said that they are still waiting to make this decision as there isn’t much clarity to government policy.
The price of diesel in India is controlled by the government, this is because it is deemed to be politically sensitive as the impact it could have on inflation could be huge. An increase in diesel prices could impact many sectors as it is widely used by transport companies around the country.
Petrol was decontrolled in 2010 and as a result the price of diesel per litre is as much as 40 per cent cheaper now in New Delhi.
Rakesh Srivastava at Hyundai Motor India is the vice president for national sales and he has said, “The plans are still under study but we are waiting for some consistency in diesel and gasoline fuel pricing.”
In India, Hyundai has the second largest car sales volumes and currently sells the i20 hatchback, Verna and Sonata sedans and the Santa Fe, which means that they have to import the diesel engines for these vehicles.
Mr Srivastava has also added that Hyundai are analysing the sales of SUVs and multipurpose vehicles within India. However, he didn’t say whether or not they are planning to launch new vehicles in these sectors.
In theory, if they can build their own diesel engines this should lower the cost compared to importing them. As a result these savings may be passed on to the customer and during these economic times every penny is worth saving. Many are very conscious of the ever increasing funds it takes to run a car, with car insurance, breakdown cover and the costs of fuel.
As diesel is obviously a lot cheaper to buy in India, compared to petrol, this will increase people’s desire for a Hyundai. This in turn will mean they can generate more profits and the savings that they passed on to customers in the first place will be exceeded.