A series of rises in petrol prices and improved demand for diesel models has led to a free fall in rates charged for petrol-powered sedans and SUVs in the used car market.
With fuel costs hitting all-time high, buyers are opting for comparatively more fuel-efficient diesel models instead, whose fuel is also 56 per cent cheaper, compared to petrol in Mumbai.
In markets like Mumbai and Delhi, petrol-driven sedans, especially in the premium range, such as those sold in the Rs 6-24 lakh price bracket in the new car market, are the worst hit with a fall in price being 25-30 per cent than their regular price.
For instance, a less than five-year-old Honda Civic, whose regular price is between Rs 5.5-6 lakh in the used car market, now carries a price tag of Rs 4 lakh. The petrol-driven sedan, which returns a mileage of seven-eight kms per litre, is amongst the entire portfolio of Honda-badged vehicles which have seen the price drop.
Similarly, other petrol-powered sedans like Toyota Corolla Altis, Fiat Linea, Maruti Suzuki SX4, Ford Fiesta and Chevrolet Aveo are sold at discounts more than the usual in the second-hand car market.
Sports utility vehicles driven by petrol engines are equally worse hit with a fall of up to 40 per cent in price. For instance, a five-year-old CR-V, Honda's only SUV in the market, is carrying a price tag of Rs 5 lakh, as against a regular price of Rs 7 lakh.
Even vehicle manufacturers have been experiencing very high demand for diesel variants, lately, with four out of every five cars sold being diesel. New car dealers of all brands across the country have stocks of petrol cars that are several months old.
Arif Fazulbhoy, director, Fazulbhoy Motors, the oldest used car dealer in Mumbai operating for over 40 years, said, "The used car market is flooded with petrol premium sedans with sellers ready to take a cut to the tune of 30 per cent than the regular price. Higher operating costs due to the steep rise in fuel price have led the owners of petrol models to dump them for diesel. In the same way, demand for diesel models have continuously outstripped supply for the past three-four months."
The fall in price of a used petrol model is higher for a premium sedan or an SUV than a compact hatchback. Hatchbacks with their smaller engines and lighter bodies are twice as fuel efficient when compared to a premium sedan.
For instance, a Maruti A-star could return a mileage of around 16-18 kms per litre, compared to seven-eight kms per litre delivered by a larger and much heavier sedan like the Toyota Corolla, according to market estimates. Petrol price rises have pushed running costs upwards, making the vehicle unviable for many.
"People who were wanting to own a car but only for weekend purposes are going in for such lucrative deals. In addition, those customers who travel for short distances of four-five kms per day, are buying the petrol models,” said a used car dealer in Chennai.
Consumer's move towards diesel cars is further fuelled by reports of another proposed hike of Rs 5 per litre in the price of petrol, which could effectively push its end price to over Rs 75 per litre in Mumbai, even as price of diesel is proposed to kept unchanged.
At the last week's Union Budget, finance minister Pranab Mukherjee proposed to raise the excise duty, resulting in a rise of two-five percentage points in excise of small cars, sedans and sports utility vehicles. This has pushed prices in the range of Rs 3,000-35,000 on such volume-generating passenger vehicles.