The diesel price hike may tempt customers to swing back temporarily to petrol cars; but they will quickly do the math and return to diesel vehicles, says Ford India’s President & Managing Director, Michael Boneham.

According to him, even with the Rs 5 hike in diesel price per litre, there is still a Rs 20 difference between petrol and diesel prices, depending on the State you live in.

“While the initial purchase price is higher, running costs (in diesel cars) are significantly lower. In the long term, diesel versus petrol cars will stay at 80:20, unless there is a big reduction in diesel subsidy,” said Boneham, in an interview to Business Line .

Ford’s small car, Figo, also sells in the same diesel-petrol proportion. Even if there is a “minor swing” back to petrol cars, “we are ready for it,” says Boneham.

Ford India has a flexible assembly line at its Maraimalainagar plant in Chennai that can produce both diesel and petrol engines, said Boneham, adding that this is a first for the company across all its plants globally.

So, any changes in fuel policy can be dealt with easily, said Boneham, referring to the debate on slapping a higher duty on diesel cars.

Overall passenger car sales in the country plunged 19 per cent in August.

In the short term, things look “tough”, admits Boneham. But he hopes consumer confidence will return during the festival season in the form of pent-up demand. Ford is particularly bullish about the upcoming compact SUV, Ecosport. It is expected to be rolled out in the first quarter of 2013, from the Maraimalainagar factory.

“The RBI has loosened cash availability. That is important because 70 per cent of our cars sold are financed. But we have to wait and see what happens beyond the festival season.”

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