According to a report, cars that have higher fuel efficiency and lower maintenance costs are expected to gain higher traction among buyers in India, especially in the sub-Rs 10 lakh category. Fuel prices in the last 15 months alone have hiked by almost 35 percent, which has immensely impacted overall vehicle running costs.
The report published by HSBC Global Research said, “Considering the fact that 70 per cent of the passenger vehicles market in India is still accounted for by vehicles costing less than Rs 10 lakh, the development augurs well for market leader Maruti Suzuki India Ltd (MSIL). Over the past 15 months, fuel prices have gone up 35 per cent, impacting overall vehicle running costs…Our channel interactions suggest that customers are increasingly becoming considerate of the recent rise in fuel prices.”
The report also drew a comparison between the contribution fuel makes to the lifetime costs of cars now and cars of the mid-2020s, for instance, Maruti Suzuki’s Swift petrol.
A compact passenger vehicle’s fuel in today’s times accounts for around 40 per cent of the vehicle’s lifetime cost, whereas fuel consolidated 30 percent of the in mid-2020.
“In the current environment, we believe cars that have higher fuel efficiency and lower maintenance costs should gain relatively higher traction among buyers, especially in the less than Rs 10 lakh category, which is still 70 per cent of the market in India,” the report added.
HSBC Global Research noted that MSIL continues to remain the flagbearer in providing efficient cars for the Indian public. “In our analysis, both in absolute terms and relative to competition, MSIL remains the market leader in fuel efficiency and total cost of ownership (COO).”
“MSIL’s competitive positioning should remain compelling given the fact that it has around 65 per cent market share in the less-than-Rs 10 lakh price category,” it added.
The report also pointed out that MSIL’s fuel efficiency has improved by 15-30 per cent in the past 10 years, citing the examples of fuel efficiency of Swift/Swift Dzire, which has improved from 18 km per litre (kmpl) nearly 10 years back to 23.3 kmpl.
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