Oil on the Boil
Global fuel prices are on the rise and we are beginning to feel the pinch But
will the petrol and diesel price hike implemented from this June any impact
on the automobile sector?
On a bright spring morning three years ago Argun Murti, a Goldman Sachs analyst,
woke up feeling not so bright. He was about to tell the world that the price
of crude oil, (Which was trading at $60 per barrel was likely to cross $100
in the near future- a claim that after wards was disputed strongly by the naysayers.
But on the second day of January 2008 sure enough oil prices crossed the $100
mark and five months later the price was hovering around the $130 mark. Argun
now has predicted that $200 per barrel is not too far.
Although our government, like many others, has increased domestic fuel prices
(Rs 5 per litre for petrol and Rs 3 per litre of diesel) what does this rising
fuel price scenario really mean for the future of automobiles? Will people drive
and ride less? Will sales of cars and bikes slowdown.
People who use private means of transport are usually in a financial position
to absorb this kind of a hike and therefore are not going to stop driving to
work just because petrol now costs slightly more than it did” Says the owner
of a fuel pump. The pump continues to register the usual sales despite the hike.
And all those who feared that a higher cost of petrol will restrict consumer
from walking into showrooms and walking out with cars were being cynical, A
Mumbai based motorcycle says a lower fuel price was never one of the incentives
to boost vehicle sales. With the economy rolling ahead on its pace, this hike
is unlikely to impact sales volumes."
What will surely happen is a change in the number of petrol vehicles sold. Already,
diesel is beginning to gain favour with Indians as sophisticated engines are
being offered across all car segments. But the category which will see a spike
in sales will be the models running on LPG (liquefied petroleum gas) and CNG
(compressed natural gas). "Alternate fuels will gain more importance than ever
before and so will fuel efficiency," says an industry expert. No surprises therefore
that global auto majors are working towards building cars that will run on alternate
fuels. Sales of the Toyota Prius crossed the one-million mark globally last
month and that has encouraged Toyota to set up a plant in Australia dedicated
to build hybrid cars. Next year Honda plans to launch a hybrid aimed at the
masses. Even back home, in the past year or so, auto makers have been introducing
alternate fuel variants of their existing models but have met with moderate
success.
All that is set to change now. With petrol and diesel prices hitting the roof,
consumers will opt for the cars which not only run on cheaper fuel, but also
give a higher efficiency. And some automobile companies have recognised this
imminent shift. Maruti gave a fresh lease of life to its longest standing model
- the 800 - with a LPG heart, while Tata Motors Introduced an LPG variant of
the Indica Xeta. The Indigo will be the next to run on alternate fuels and Tata
executives say that the company is working on developing hybrids. M&M too is
on the verge of bringing out a hybrid version of its flagship Scorpio. Along
with the Santro, now the Hyundai Accent also comes fitted with an engine which
can run both on petrol and CNG. Hyundai says that it is working on introducing
the LPG variants for its Santro, Getz and the Accent in the near future. And
if you thought that only small and mid-sized cars were being launched with alternate
fuels, luxury car maker Mercedes Benz too is exploring the option of bringing
a CNG version of its cars to India. How's that for a shift in attitude?
Toyota Motor Corporation his developed a new zero-emission fuel cell vehicle
that has monger cruising distance than its previous models and can operate in
freezing temperatures - making it more accessible. The International Energy
Agency has estimated that billion electric cell vehicles may need to be put
on the mod as part of an energy technology revolution to have greenhouse Vs.
emissions by 2050.
