Diesel car models see downhill trend as gap between prices of fuels narrows

Sales of diesel models for passenger vehicle makers are continuing the downhill trend as car buyers in India increasingly veer towards gasoline- driven models following a narrowing price gap between the two fuels. Analysts expect the ratio between petrol and diesel to get skewed further in favour of petrol.

A deregulation in prices of diesel from October 2014 has led to structural reduction in the price gap of diesel and petrol. The gap narrowed from a historic high of Rs32 per liter in June 12 (pre-deregulation) and Rs21/liter in July 2015 (post-deregulation) to an average Rs7/liter in FY20, according to a recent Motilal Oswal research report.