Petrol car owners lucky as diesel price skyrockets

Petrol car owners are in comfortable zone as the diesel prices surpassed that of petrol in the national capital Delhi.

The price of diesel in Delhi overtook petrol for the first time with OMCs increasing the price of diesel by 48 paise per litre to Rs 79.88 even as the price of petrol was at Rs 79.76, not hiked for the first time in 18 days. Traditionally the price of diesel has been lower than petrol.

The price gap between petrol and diesel in Delhi stood at Rs 7.3 on May 5 when the Delhi government increased the VAT on diesel to 30%  from 16.75% while it increased to 30% from 27% on petrol. Diesel also attracts an additional air ambience levy of Rs 250/kilolitre.

It may be noted that petrol vehicles are cheaper by around Rs 1-1.5 lakh. The customers were buying the diesel cars primarily because it would reduce their fuel cost in longer term. But since past two years the price gap between petrol and diesel started tumbling owning to international oil price fluctuation. This resulted in the sales of petrol cars increasing in many regions of the country.

In line with the growing trend for petrol, Maruti Suzuki, the largest car seller in India, has announced six months ago of manufacturing only petrol vehicles in the future while discontinuing all it diesel variants. The announcement from Maruti Suzuki created buzz in the market, making the prospective car buyers to analyse about the profit of buying petrol cars.

Double Profit

Now the diesel price surpassing petrol price has given double profit for the petrol car owners who already saved Rs 1- 1.5 lakh while buying.

According to research by Automotive India News, there is very small difference between international prices of petrol and diesel currently leading to taxes becoming the main  component maintaining a price difference between both these fuels.

While other states have also hiked levies on both petrol and diesel, most of them have maintained lower tax rates on diesel than on petrol to keep the diesel price below the price of petrol despite a greater hike in the price of diesel than the price of petrol in the past 18 days.

However in the future, there may be possible that even other states might increase levies on diesel that may result in diesel price crossing petrol.

Petrol Price in Indian Metro Cities & State Capitals as on June 25, 2020