TITLE: Study of Customer preference towards petrol or diesel cars

Guided by: Prof Priyadarshan Patil

Presented by: Rohit Kaweri Aarti Gajul

ABSTRACT
This paper is based on the recent study of customers preference towards petrol cars or diesel cars. Paper focuses on automobile industry which has seen a lot of fluctuations in recent market due to fuel price deregulations. The principle findings are that the deregulation has changed the customers preference from diesel cars to petrol cars. The paper analyses price of diesel being nearing to petrol, there are various factors for example, maintenance cost, tax, resale value, and marginal utility that affects the customers consideration while buying a car. Oil prices wave Indian automobile industry. The paper considers these factors and its effect on customer buying behavior, showing the utility graphs/ tables of certain cars petrol or diesel variant. The paper suggests that opportunities arise for the players to move up and bring in new technology for diesel cars and develop cars for new markets.

OBJECTIVES 1. The present study aims at revealing the customers preference towards petrol cars than diesel cars 2. To investigate what prominent factors influence customers to purchase petrol cars than diesel

INTRODUCTION Diesel is consumed for a variety of purposes and India relies heavily (around 80 per cent) on imported crude oil (the principle raw material) for its production. This in turn gives rise to a host of concerns including, on pricing mechanism that on one hand influences technology adoption and resource allocation, while on the other hand impacts current account and fiscal

balance. As a consequence, price of diesel and efforts to maintain its uninterrupted availability has engaged the attention of policy and decision makers of automobile sector. There is recent diesel price deregulation in India which is rightly going to affect the buying behavior of customers. The marginal utility of petrol and diesel cars is found to be same. So after comparing all the factors while buying a car, petrol cars rightly fit into the picture of customers choice. These factors include tax for diesel cars, fuel cost, maintenance cost, resale value etc. The manufacturers of automobile needs to think over this recent fuel deregulation and plan the strategy accordingly with customers perspective.

Page 1

Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum are the Oil Marketing Diesel & Petrol Pricing Mechanism in India Companies (OMC) which import and market oil in India. The price of oil these companies Petroleum products prices always make quote in India is the price quoted on the headlines in India. The reason for this outcry is Singapore Exchange. So the price these because of the pricing structure of Petrol and companies quote is not the actual cost of oil in Diesel in India. India. It is rather the price of oil in Singapore. LITERATURE REVIEW:The petrol and diesel prices which customers pay at a Retail Outlet are not its actual cost. A barrel measures 159 liters. So (125*50)/159 works out to 39.30 in Rupees. If the retail price is Rs.66 then the differential amount of Rs.26.7 is the tax you pay the Governments at the Centre and State Levels. Thats the reason why Petrol and Diesel prices cheaper in a Union Territory like Pondicherry. Petrols Pricing Structure: Fuel Component-52% Customs Duty 4% Excise Duty -25% Sales VAT -17% Dealer Commission-2% Diesels pricing Structure: Fuel Component-66% Customs Duty 7% Excise Duty -13% Sales VAT -12% Dealer Commission-2% Petrol in India has already been deregulated in 2010. What this means is that the fuel component in the cost structure of Petrol swings in tandem with the international prices of crude, while the taxation percentage remains the same. So any increase in the prices of brunt crude is passed on to the customer. Unlike petrol, diesel cannot be deregulated since 95% of its actual usage is in industries while the remaining 5% is used by vehicles as fuel. Any increase in diesel price will inflate the prices of all manufactured goods since the cost of production and transportation goes up which leads to undesirable levels of Inflation. If the oil price goes up in the Singapore Exchange then these companies quote the cost of oil proportionately. But since price of diesel is regulated these companies cannot pass on the price hike to the common man. They continue to sell Diesel at a rate determined by the Government. So the losses incurred by these companies by selling at lower costs are known as under-recoveries. The Government pays these companies on behalf of its citizens in the form of Subsidies. The Government on the one hand taxes oil in the form of VAT and Excise duty and subsidizes its prices on the other. Yet the government earns more revenue in the form of taxation than losing it in the form of subsidies year after year. When the Oil prices go up the major beneficiary is the Government because a bigger sum is mopped up by the Government in the form of taxes on oil. Proponents for a hike in diesel price argue that it would encourage fuel efficiency. But any hike in diesel prices would affect the common man the most in the form of inflation. Hence the Government has decided to tax Luxury cars and Air Travel by which the Super Rich get taxed thus saving the Common Man from any further burden. A diesel price hike of Rs. 5 in September 12 has seen demand for passenger cars perk up in favor of petrol versions. Going forward, it will decisively tilt the scales in favor of petrol when the proposed hike of Rs. 10 in diesel will be implemented.

Page 2

The industry expects the momentum for petrol cars to gather speed. In 2010-11, the price differential between petrol and diesel stretched to almost Rs. 25 a litre forcing many customers to opt for diesel cars.

diesel prices in September 12. Car makers with both petrol and diesel variants of the same model now say the diesel-petrol sales ratio is down to 80:20 from 85:15 earlier. Most diesel models are no longer commanding waiting lists and many are in fact already on discount. The diesel petrol price differential which at one point was as high as Rs. 24 per litre - led to the complete diesel-isation of the Indian car market from less than a third to more than 60%. The increase in diesel prices and the sliding demand for diesel cars may give car companies planning diesel engine facilities in India something to think about. Car companies like Maruti Suzuki, for instance, have already announced that it would take a call on increasing investments in its diesel facility in Manesar once the fuel policy road map becomes clearer.

Capacity ramp-up: The industry will have to quickly ramp up capacity. Maruti Suzuki, Indias largest carmaker is looking to Effect of diesel price on auto industry: expanding its capacity from 240,000 diesel cars a year in fiscal 2012 to 300,000 in the current With the buzz about diesel prices going up by one. It is also sourcing 100,000 additional Rs 10 per litre over the next ten months doing diesel engines from Fiat, according to an earlier the rounds, the auto industry's demand for a report from Kotak Institutional Equities. clear fuel policy is picking up speed. Currently Hyundai Motor India is setting up dieselthe gap between petrol and diesel has come engine capacity of about 150,000, while Ford down to around Rs. 20 per litre. If the Motors is growing capacity from 250,000 units government does go ahead with the increase in to 330,000 units a year by mid-2012. This will, diesel fuel prices, that gap would further reduce however, take some time. In the meantime, to around Rs. 10 per litre - neglible given the delivery of diesel cars is only expected to be discounts and other benefits that are currently delayed. R C Bhargava, chairman of Maruti pushing petrol car sales. The diesel fuel price Suzuki said that waiting lines for diesel cars hike is not something the auto industry is too will grow longer. unhappy about. It has been lobbying hard for price parity between petrol and diesel as Operating margins: Ramping up diesel against the imposition of a diesel tax on diesel capacity will also require large capital fuel vehicles. The argument is that private expenditure. This will mean a large capital diesel vehicles consume a miniscule percentage expenditure outlay, putting pressure on of the total diesel consumption in the country operating margins in the short-term. Given the and the transportation sector comprises a much tight liquidity and high interest rates in the larger slice of the diesel vehicle pie. The domestic market, and a falling rupee, demand for diesel cars has already started to borrowing costs will also likely be higher slide following the Rs 5 per litre increase in whether it is in domestic or foreign currency.
FIG 1: Diesel and petrol price comparison Page 3

Unit sales: Most Indian automakers rely heavily on petrol driven vehicles. This is particularly true of two-wheeler makers, whose entire portfolio is based on petrol engines. The new price hike could deter buyers from opting for petrol cars and two-wheelers. This will directly impact revenues and profits for automakers that have a petrol-heavy portfolio. Segment growth: The petrol segment has already retreated by 14 per cent in fiscal 2012, while diesel car sales have grown 37 per cent. With the petrol price hike, the growth in the diesel segment is only expected to grow. Even a hike in diesel prices, which some experts are saying is likely as early as Friday, will still keep diesel cheaper than petrol. Too steep a hike in diesel will push up inflation, which the government is keen to avoid. Small car demand: This is the only bright spot for automakers. In a situation where petrol prices are in the vicinity of Rs. 80, demand for small cars will likely increase, since fuel typically accounts for about 50 per cent of running costs. Apart from space and environmental concerns, especially in urban centers, small cars are highly fuel efficient, which appeals to the highly value- and budgeconscious Indian buyer. Small cars with diesel engines will be in even higher demand. Economics analysis of car for running at 50kms: According to an ET analysis, assuming a user is driving the vehicle for a minimum of 50 kilometers a day, the time taken to recover the premium paid (the extra money paid for the diesel car) for a diesel car like Chevrolet Beat as against its petrol-fuelled counterpart is two years and five months or 44,000 kilometers.

months or 58,000 kilometers, if the proposed diesel price hike is implemented. In case of best sellers such as Maruti Suzukis 0.71 % Swift, which comes with a premium of Rs 1.08 lakh on the diesel top-end variant, the time taken to recover will increase from three years seven months or 66,000 kilometers currently to four years 11 months or 89,000 kilometers. The diesel cars already command a premium of 15-23% over its petrol variants (Rs.75, 000 to Rs. 1.25 lakh) and are twice as expensive to maintain service and repair. However, the diesel cars do offer 15-20% more mileage than petrol cars and are better in terms of emission control. Many of the companies are now making the case for a diesel car if the person uses the car for more than 50 kilometers a day. Considering that the lifecycle of a car is only 4-5 years, a customer may not benefit much by owning a diesel car, if he or she does not drive long distances.

FIG 2: Utility aspect of petrol and diesel cars

Scenario: The share of petrol cars, which constituted 81% of the overall market in FY08, has been slipping consistently year-on-year due to the The period to recover the premium paid for a introduction of quality diesel hatchbacks and diesel car will extend to three years and two sedans in the market. The drop, however, has been dramatic in the past couple of years, with petrol prices getting
Page 4

deregulated and diesel prices still controlled. The price gap between petrol and diesel fuel which was around Rs 9.80 in May 2010 widened to Rs 25 in a short span of a year. This resulted in a major shift in demand for diesel cars.

tools to define the cost of ownership at the dealership. Toyota Kirloskar even reached out to professionals like teachers, doctors, lawyers and employees of the PSU sector who by virtue of their vocation need not travel a lot and, hence, are not likely to run their vehicles beyond 1,500 kms a month. However, if the usage is higher than that, despite the diesel price increase, the diesel cars will still be more economical.

The share of petrol cars, which stood at 75% in FY10, slipped to 69% in FY11 and further to 58% at the end of FY12. It went further down to 47% in July 2012 before it gradually recovered. The share of petrol cars has seen a gradual increase month-on-month to 54% by October of 2012, before closing out the month With a proposed increase in diesel prices, a return to petrol cars is a given, say experts. of November at 53%. Already, Toyota Kirloskar has seen a 5% shift towards petrol cars post the diesel hike and ditto is the case for General Motors. The Chevrolet Beat petrol contributed 15% of the overall model's sales before September. As on December it contributed 20%.

Sandeep Singh, DMD & COO (sales, marketing, customer service and commercial divisions) Toyota Kirloskar says the industry has seen a shift in demand from diesel to petrol cars in the entry level segment after the diesel price hike in September. "An array of factors is responsible: The customer's realization of the advantages of owning a petrol car over a diesel one, the government's prior announcement of its plans to increase diesel prices and, finally, carmakers like Toyota, who have maintained a steady price gap between their petrol and diesel vehicles." Fig 3: Money recovery of vehicle After a knee-jerk reaction from many customers towards diesel cars, many automotive companies imparted intensive training to their sales personnel and dealers. Carmakers such as Maruti Suzuki BSE 0.65 %, Hyundai India and Toyota Kirloskar developed
Page 5

Calculations:
2012 Petrol Vs. diesel Calculation Petrol car, Yearly usage 5000Km Petrol Price Rs 70.40, Diesel Price Rs. 50.40 (During November 2012) Petrol Swift VXI Expense 5000Km Year Vehicle cost 5.8 Lakhs Interest @ 10% = 58000 5000Km year petrol expense @ Rs. 7018Km L =20000 Insurance =13000 Maintenance =2500 Interest for FD 70000s@ 10 %( 6.5L-5.75L) =7000 Total yearly expenses =86000 Diesel Car Monthly Expense 7166.66667 Note: Rs. 75000 can be put in FD Diesel Ritz VDi Expense 5000km/year Vehicle cost 6.5Lakhs Interest @ 10% =65000 5000k/m/year Diesel expense @ Rs. 45.20km/L = 11250 Insurance= 13600 Maintenance= 5000 Total Yearly Expense= 94850 = Diesel Car Monthly Expense 7904.16667=

Diesel Ritz VDi expense 10000km/ year Vehicle cost 6.5 Lakhs interest @10%= 65000 5000k/m/year Diesel expense @ Rs. 45.20 km/l = 22500 Insurance= 13600 Maintenance =5000 Total= 106100 monthly expense diesel car= 8841.66667 Resale value 50000 more for VDi to VXI NOTE: up to 10000km yearly usage diesel car does not give any financial benefit to the car buyers. Petrol car less NVH, good ride comfort, less strain to legs, good pickup, low maintenance, less starting trouble etc. are the benefits of a petrol car owner can enjoy. Case

The acceptance of diesel vehicles has witnessed a rapid rise in the last decade in India. With the advent of new technologies such as common rail direct injection, EGR systems and exhaust treatment systems, diesels today offer great performance, excellent mileage and on many accounts it is the cleaner Note: Diesel car requires Rs. 8850 more than fuel! The inherent ability of diesel engines to produce excellent low end torque makes for petrol car whose yearly usage is around great driving; however these factors basically 5000km. aided diesel engines to gain an acceptance in Resale value 50000 more for VDI to VXI the passenger car market as they didnt spew black smoke like in the past. The icing on the Petrol car expense 10000Km/year Vehicle cost 5.8 lakhs interest @ 10% = 58000 cake however has to do with the pricing of fuel. Assuming diesel is priced at around Rs. 50/litre 10000k/m/year petrol expense @ Rs. and petrol is approximately Rs. 70/litre. The 70,18km/L = 40000 rates change in different parts of the country; Insurance = 13000 however the ratio of difference between the Maintenance = 2500 Interest for FD 70000s @ 10% (6.5 5.75L) = two is more or less the same. It is the cumulative knowledge of all these facts that 7500 make diesel engine passenger vehicles the Total= 106000 number one choice for many customers, Monthly expense petrol car= 8833.33333 however there is a chink in the diesel armour Rs 75000 in FD and that has to do with the pricing of the vehicle as compared to its petrol counterpart. Deeper insight is required while trying to
Page 6

decipher the cost benefit between diesel and petrol vehicle variants. Elements such as the timeline of usage, cost difference between the two models, fuel price disparity, maintenance expenses and service charges, parts wear and tear and depreciation costs sum up the major list to assist in calculating the actual benefit. It is a line of thought that most customers overlook, however our cost-benefit study should shed some light on the topic and hopefully help customers make a more informed decision, rather than just going with gut instinct or following the claims of manufacturers. Note: The study is based on the following assumptions: 1. Costs of Petrol and diesel are for representational purposes only. 2. The difference in price of petrol and diesel remains constant throughout the five years. 3. Cost of repairs and maintenance on both the variants remains nil or equal. 4. Both the variants will bring in 50% of the cost at the time of resale. 5. Average driving is 15,000kms/year for both the variants.(in case 2) 6. The car model under consideration is the new Maruti Suzuki Swift (entry level variants for both diesel and petrol). This is only indicative, and gives a good idea since thedifference of cost between petrol and diesel variants of other cars also hovers around the same figure. 7.

variant is higher than that of its petrol equivalent. Taking all these dynamics into account, the running cost of a petrol car comes to approximately Rs. 4.93/km in comparison to Rs 9.5/km for the diesel if both the vehicles are run for 15000kms annually. Increasing the annual mileage put on the odometer, the diesel is at par with the petrol variant if and only if a person does a minimum of 45,000kms annually. Now, it is understandable that an average Indian cannot put 45,000kms on the odometer annually considering the average run of an Indian being around 15,000kms per year. So does that totally rule out diesel option? Well, no. reverse calculating the amount of money saved on fuel (see: case 2) by using a diesel car amounts to Rs. 30,500 annually after deduction of service costs for both the vehicles. Even so, after adding interest on the additional amount paid by a buyer at the time of purchase the diesel would be at par with the petrol variant mid-way through the third-year with an annual running of 15,000kms, the money you would have saved in terms of running costs in a diesel would cover up the extra price you have paid, and you would have saved an extra Rs. 9,700 as well. Only at the end of the fifth year do things begin to look rosy for diesels, with around Rs.40, 000 saved in running costs over these five years.

Maruti Suzuki Swift petrol with the diesel variant. The difference in the cost of
the two variants is Rs.90, 000 with diesel being the more expensive of the two; add to the interest one would gain on the excess amount at 10% p.a. if the petrol variant was purchased. The diesel variant being more efficient and the cost of diesel being Rs. 20/litre lesser than that of petrol, it saves a lot of expenses on fuel, but the cost of regular maintenance of the diesel
Page 7

The value of a Rs. 4.95 lakh petrol car will be reduced by Rs. 2.47 lakh at the end of five years. The value of a Rs 5.85lakh diesel car on the other hand will be reduced by Rs. 45,000 lost straight in depreciation for a diesel. This is an extreme scenario the market dynamics for more in-demand second hand diesel car space may result in lesser depreciation, and a better resale price. Either ways the Rs. that the diesel user may gain after using the car for five years starts looking less rosy once you factor in depreciation as well. Although with the price of petrol is as high as Rs. 70/litre, the diesel may seem like a more affordable option, it may not necessarily be so. The diesel starts making economic sense for users who either have run of 45,000kms annually or those who plan to retain the car for at least five years or till the time they hit 50,000kms on the odometer. And for those who have much less travelling to do in a car, the petrol still makes for a better buy. What about the feel factor? Although mathematics seem to be in favor of a petrol car unless you plan to retain a diesel for a prolonged period or drive seriously long distances within the first year itself, it is clear that the choice between petrols and diesels also has other angles that must be considered before making that final call. Psychological satisfaction of utmost importance to Indian customers, and along with it comes the mental peace of not having to refuel a diesel car every few days unlike the petrol which is pretty much perpetually thirsty. But, simply the fact that the diesel neednt be refueled very frequently doesnt make it an economical option. A diesel starts making sense only when you run of at least of 15, 000kms anything less than that and diesel will smartly fool you into feeling richer just because you end up filling fuel less frequently. It is not just thirst of fuel of petrol cars that bring diesel vehicles into the lime light. The numbers before you clearly state, that you
Page 8

What about depreciation? Alright, so you finally made up the extra amount you spent in the initial invest of a diesel car, but what about depreciation? Assuming that both the variants have been reduced to half their cost after 5years, you will still be losing more money in depreciation for the diesel, since it was a more expensive buy to start with.

should consider buying a diesel only if you monthly run exceeds 1000kilometers. In fact our thesis was endorsed by Toyota at the recent launch of the ETIOS and LIVA diesels, where they made it very clear that for a diesel to start looking rosy; one has to run it for nearly 2000kms per month. The numbers are before you, so remember that with a diesel, you would be paying that extra cash for first three-four years of running for the satisfaction of driving a diesel. It still is a case of different strokes for different folks, and choice still remains in the hands of the buyer. Hope this article helps you make a more informed one. Current Scenario: Through the last two years, automobile companies have invested Rs 22,000 crore, a major part has gone into increasing diesel production capacity. If there is so much ambiguity in government policy, how would the industry take decisions on investing in the country?

Companies such as Maruti Suzuki, Hyundai Motor India, Volkswagen, Honda CarsIndia and Volkswagen have announced plans to set up diesel engine manufacturing units in the country to meet the growing demand for diesel cars. While Maruti Suzuki has committed investment of Rs 1,700 crore to enhance diesel engine production capacity to 3,00,000 units by 2014, Hyundai has approved investment of about Rs 1,600 crore to set up a new engine plant and metal press shop. The demand for diesel vehicles has been spurred by the subsidy offered on the fuel. The government realizes this, and a correction is necessary. Fuel prices should be marketregulated. But instead, if the government decides to impose additional taxes on diesel vehicles, it wouldnt be an optimum solution, said another senior executive, on condition of anonymity. Instead of levying a one-time tax on fresh purchases of diesel vehicles; a proposal had been made to the finance ministry to impose additional annual road tax of Rs 10,000-20,000 on diesel cars and an additional annual road tax of up to Rs 50,000 on diesel sports utility vehicles.

Fig 4: Share of petrol & diesel cars over years

Estimates show while diesel production capacity rose 35 per cent in 2011-12, production capacity for petrol vehicles fell about 12 per cent.

In Delhi, petrol is 43 per cent more expensive than diesel. High petrol prices have led to an increasing number of consumers opting for diesel cars in the last year. In the first half of this financial year, while diesel vehicle sales rose 40 per cent to account for about 53 per cent of the passenger vehicle industry, demand There are two issues. First, the imposition of for petrol vehicle fell 20 per cent. additional taxes to recover the fuel subsidy on
Page 9

25 per cent environment tax on diesel vehicles, arguing the benefits of the entire public transport system in Delhi switching to compressed natural gas were lost, as a large number of diesel cars were added to the citys traffic every day. To encourage people to use public transport systems, Salve also sought an annual environmental compensation charge of two per cent (for petrol vehicles) and four per cent (for diesel vehicles) of the cost of vehicles.

diesel vehicles. Second, environmental FINDINGS & DATA ANALYSED: concerns are being raised assuming diesel technology is not clean. If diesel vehicles are PETROL/DIESEL CAR SHARE meeting BS IV emission norms, as have been outlined by the government, there is no point saying they cause pollution. Instead, all old vehicles that dont meet emission norms should be taken off the roads, Personal vehicles account for 1.03 per cent of the diesel consumed every year. The agriculture, power and truck segments consume 18.3 per cent, 6.6 per cent and 37.3 per cent, respectively. The Delhi-National Capital Region accounts for about 29 per cent of all passenger vehicles sold in the country RESEARCH METHODOLOGY:
DATA COLLECTED: E Pie chart 1: Shows that 73% respondents use petrol cars and 27% respondents use diesel cars.

27%
Petrol Diesel

73%

Sample Design: Sample of 50 was well designed and taken to cover multiple aspects of objectives. 50 cars owners both petrol and diesel variants were rightly questioned and interviewed with views over the papers objective. Questionnaire: In this research paper questionnaire has been used for the data collection in order to get accurate information. The questionnaire has distributed only among car owners of petrol and diesel variant. The Questionnaire has constructed on variables such as price, efficiency, maintenance, impact of fuel prices etc. The questionnaire comprised of nine questions.

So from this we can analyze that petrol car holds a major share in the survey. This was also because of family segment that was targeted as diesel segment is mostly held by commercial vehicles.
REASON FOR PURCHASING PETROL CAR

22 %

EFFICIENCY LOW MAINTENANCE

78%

Pie chart 2: From the above analysis, we can make out that 78% respondents purchase petrol car due to efficiency of the car and 22% respondents purchase petrol car due to low maintenance facility.

Page 10

REASONS FOR PURCHASING DIESEL CAR

MONTHLY MAINTENANCE OF DIESEL CARS 70 60 50 40 30 20 10 0 <1000 <1500 <2000 <2500

18%
EFFICIENCY LOW FUEL COST

Series1

82%

Pie chart 3: Shows that 82% respondents purchased diesel car due to low fuel cost and 18% respondents purchase petrol car due to the efficiency of the car.

Graph 2: Shows that around 60% of car owner spends less than 2500 rs in maintenance, 31% spends less than 2000 rs, 8 % spends less than 1500 rs, and around 1 % owners spends less than 1000 rs.

Low fuel cost comes as to be major reason for the users to purchase diesel cars as it finds it would to be most affordable option for long running.
MONTHLY MAINTENANCE OF PETROL CARS 70 60 50 40 30 20 10 0 <1000 <1500 <2000 <2500 Series1

Maintenance of diesel cars are quiet high due to low engine technology that can burn low calorific valued fuel.
SATISFACTION LEVEL OF PETROL CARS CUSTOMERS

11%
YES

89% 89%

NO

Graph 1: Shows that around 59% of car owner spends less than 2500 rs in maintenance, 31% spends less than 2000 rs, 9 % spends less than 1500 rs, and around 1 % owners spends less than 1000 rs.

Chart 1: Shows that 89% respondents are satisfied with petrol cars and 11% respondents are not satisfied with the petrol cars.

Maintenance requirement for petrol cars is found to be lesser, due to high efficiency of petrol engine and good features.

Petrol car owners seems to be satisfied, reasons could be many such as low maintenance, better performance etc

Page 11

SATISFACTION LEVEL OF DIESEL CARS CUSTOMERS

IMPACT OF FUEL PRICE HIKE ON BUYING BEHAVIOUR

52%

48%

54 52 50 48 46 44 42 YES NO

Series1

Chart 2: Shows that 48% respondents are satisfied with the diesel cars and 52% respondents are not satisfied with the diesel cars.

Graph 4: Shows that 54% of population think that new fuel price hike will impact the customers buying behavior and 46% think it wont.

Diesel car owners are mostly dissatisfied due to performance there vehicle gives after few PREFERENCE OF PETROL/DIESEL CAR WHEN FUEL PRICE IS SAME: years. Maintenance requirement increases year after year.
CUSTOMERS FOLLOWING MONEY SAVING APPROACH WHILE BUYING A CAR

Petrol NO Series1 YES Pie chart 4: From the above analysis we can interpret that 63% respondents give preference to petrol cars when price of petrol and diesel are same.

63%

37%

Diesel

40

45

50

55

Graph 2: Shows that 53% of people consider all aspects of pricing and use all money saving approaches while buying a car. While 47% dont follow anything they are more concerned about the brand of the car.

Indian customers are more conscious about money and think about the recovery of money from their investment on vehicles.

Customers will prefer petrol cars over diesel cars as it would be the most suitable option at that scenario. Petrol cars are good performers in terms of maintenance, tax saving, money saving and resale value etc. so reason for petrol car preference is rightly justified.

Page 12

INTERPRETATION OF DATA The cost effectiveness of petrol cars are higher than diesel cars Factors such as fuel price, tax, maintenance, resale value, are major factors that affect customers buying behavior.

REFERENCE Business standard International Journal of Multidisciplinary Research Vol.2 Issue 6, June 2012, ISSN 2231 5780 International Indexed & Referred Research Journal, September- 2012, ISSN 0974-2832, RNI- RAJBIL 2009/ 29954; Vol. IV * ISSUE- 44 www.mouthshut.com www.zigwheels.com www.economictimes.com www.timesofindia.com www.dna.com www.moneycontrol.com www.bloomberg.com

SUGGESTIONS:Opportunities arise for the players to move up and bring in new technology for diesel cars and develop cars for new markets. Introduction of newer engines in diesel variants like CRDi (Common Rail Diesel Injection) engines and turbo engines would give better performance for cars which would again make customers think about the utility benefit. CONCLUSION: Customers prefer to buy petrol cars than diesel cars Manufacturers tend to increase the production of petrol cars due to deregulation

Page 13