The steep hike in the petrol price in India has caused much heartburn in the Indian auto industry. The auto industry plagued by high interest rates on auto loans due to RBI's monetary policy for keeping inflation under check got a further jolt with the steepest ever hike in petrol prices in India. Many auto manufacturers are looking at expediting their plans for launch of diesel cars in India. Honda Siel may follow suit to ensure that its growth story in India does not suffer on account of increasing fuel prices.
The recession in economies around the world and the Eurozone crisis is affecting financial markets around the world including that of India. The Indian currency too is suffering owing to the global risk aversion of investors who are now investing in American and German bonds to keep their investments safe. The weak currency is further inflating India's oil import bill. The hike in diesel prices will add to the inflationary pressure while kerosene price hike will hit the poor. As a result, it is invariably the petrol prices that are hiked every now and then. The petrol price hike story has been pushing the auto manufacturers towards considering the launch of more diesel models in India. The decline in sales of petrol models by 16 percent in the last fiscal should have been taken as a cue for launch of diesel models by Honda Siel but as the upward spiral in petrol prices refuses to die down, the launch of diesel models has now become inevitable. Else, the car manufacturer risks losing its market share in India.
The buzz in the auto industry is that diesel models of Honda City, Brio and Brio Sedan may now be launched by 2013 rather than 2014. Diesel variants of Brio and Brio Sedan will come in the first half of next year while that of Honda's City Sedan will be rolled out by October, 2013. An official confirmation is awaited on the matter. Honda plans to invest Rs. 3000 Crore in India to build capacity and launch new models.