Hyundai Motor India (HMIL) will cease to offer diesel engine options in sedans amid increased consumer preference for petrol fuel options and a steep spike in costs of diesel vehicles due to impending implementation of the second phase of Bharat Stage VI emission norms.
Share of diesel vehicles in hatchback and sedan sales has come down to 1.4% (April-February FY23) from 11.4% in FY20, data from industry body Society of Indian Automobile Manufacturers (SIAM) shows.
Some carmakers including market leader Maruti Suzuki, Skoda-Volkswagen, and Renault-Nissan had completely exited the diesel vehicle segment in the local market during the transition to BSVI standards in April 2020.
The country’s second largest carmaker, however, said it will continue to produce diesel variants for its range of sports utility vehicles.
“Demand for diesel is limited to but very strong in SUVs,” said Tarun Garg, chief operating officer of Hyundai Motor India. “In fact, the bigger the SUV, the greater is the proportion of sales we register from diesel.”
Garg was speaking on the sidelines of the launch of the all new Verna priced between Rs 10.90-17.38 lakh (ex-showroom) which is offered only in two petrol powertrain options to customers – 1.5 litre naturally aspirated petrol and 1.5 litre turbo petrol. Hyundai has so far received 8,000 bookings for the car.
With the second phase of BSVI emission norms set to come into effect from April, prices of diesel vehicles will go up, Garg said.
Hyundai, however, has already readied its portfolio to meet the enhanced standards and factored in the cost of upgrade in prices of its vehicles, February onwards.
Garg said there is a latent demand for sedans in the Indian market. “In India, there were not enough choices in the sedan segment earlier. There is a set of customers who prefer sedans due to the performance and comfort these vehicles offer. With new models now coming in, sales have started growing”, he said.
Honda Cars India launched the new City (priced between Rs 11.49 and Rs 20.39 lakh ex-showroom, Delhi) earlier this month, while Skoda and Volkswagen drove in midsize sedans Slavia and the Virtus in 2022.
The executive segment currently accounts for 27% of all sedans sold in the country. The remaining volumes come in from entry-sedans such as Maruti Suzuki Swift DZire, Hyundai Aura, and Honda Amaze.
Interestingly, 41% of the bookings for the new Hyundai Verna has come from buyers aged less than 30 years, compared to 20% for SUV Creta. Nearly a fourth of these customers are first-time buyers.
Given the robust response, Hyundai expects to double sales of the vehicle in the next 12 months, compared to 19,000 units sold in 2022, said Garg.
Overall, 412,000 sedans were sold in the domestic market last year, which is an increase of about 40% over 296,000 units sold in 2021. With this, the share of sedans in overall sales of passenger vehicles went up to 10.8% in 2022, from 9.5% in the previous calendar year.
Broadly, Garg said passenger vehicle sales in the local market should grow in healthy single-digits in the ongoing financial year. “The growth of 20-22% last year came on a low base. A healthy single-digit growth this year is good. While the Indian economy is robust, global news is coming in of an impending recession in the US and layoffs in the tech space. These may affect consumer sentiments,” he said.
