Diesel vs Petrol Cars in 2013 Scenario!

[alexddas]

Friends,

Today's TOI article on top ten selling cars.

Low-priced cars aren’t selling big

The article is on top selling petrol cars, and why nano being a low cost car not selling, and people's trust over maruti. thats what i came to understand and the only diesel car discussed is bolero.

Alto is good looking,good pedigree,good AC,good mileage,less maintenance,good re-sale,100% worth for its price. a best and cheapest small car to be owned.
Nano is nowhere a competitor to alto.cars wont sell only for the reason its cheap.
For diesel cars the best selling car in India is swiftD,another car worth for its price.

 

[IndicaDLS2002]

For diesel cars the best selling car in India is swiftD,another car worth for its price.

Sure if you say so

 

[S Class]

For sedans, it's diesel, for sportscar it can be petrol. But with engines like that in BMW 640d, even diesels are getting better, not to forget better torque & FE.
If I have enough Vitamin M, I will even buy Porsche Panamera in diesel.
BTW, Kapil Dev bought first diesel Panamera in India. Panamera ka jawab nahi.

 

[IndicaDLS2002]

Anyone care to explain this news article in the newspaper today? Could not really make much out of it....


Times of India News Article Jan 29

 

[Rightnow]

Anyone care to explain this news article in the newspaper today? Could not really make much out of it....

Times of India News Article Jan 29

Currently the price is taken as weighted average of 20% of domestic price + 80% of imported price. The domestically produced (or refined) fuel price comes lower than the imported ones and thereby currently what we pay tends more towards the imported prices. The article says that if price is taken at 100% of domestically produced fuel, the final landed price to consumers would be less. So the government will have to pay less subsidy to retailers to compensate for their loss.
Although, in this scenario the refineries would have less margin as compared to before due to reduction in overall price.

 

[IndicaDLS2002]

1 minute, What we import is always crude oil right & pretty much everything is refined here in India? Is my understanding right ?

So domestically produced does it really mean oil drilled here in India?

One day the Govt talks about bringing up every fuel price to free market prices next day they talk about "export parity price" and reduction in prices!

secondly if if price is taken at 100% of domestically produced fuel, then would that not mean selling the imported fuel at a loss meaning getting the subsidy back in place again?? isn't this article contradictory to what the govt has been saying/trying to do over the past few months?

Am I the only one confused or is there a deliberate attempt by media/govt to confuse everybody!

 

[Rightnow]

1 minute, What we import is always crude oil right & pretty much everything is refined here in India? Is my understanding right ?
So domestically produced does it really mean oil drilled here in India?
One day the Govt talks about bring up every fuel price to free market prices next day they talk about "export parity price" and reduction in prices!
Am I the only one confused or is there a deliberate attempt by media/govt to confuse everybody!

Yes. India still has capability to produce oil by drilling, though only 20% of the total requirement.

Such reports and suggestions keep coming from government, what actually happens in reality would be different. We should have learnt to ignore such reports by now..

 

[IndicaDLS2002]

Yes. India still has capability to produce oil by drilling, though only 20% of the total requirement.

Such reports and suggestions keep coming from government, what actually happens in reality would be different. We should have learnt to ignore such reports by now..

No wait, I went back & read the article again!

It talks about 3-4 entities here....of how fuel is sold .. in India

1. Refineries >>2. State Retailers >>3.PumpOwners >>4.Consumers

Govt is the fifth watching this whole show!

Now Govt had asked the price between 1 & 2 to be lowered to EPP which will narrow the current losses of the retailers (which is currently being subsidized/covered/paid by Govt in cash) so the end result is Diesel/kerosene/LPG will not be raised as much as we thought for end consumers to cover the retailers' losses!

Although the flaw to this whole theory is that the Govt is just shifting the losses from the retailers to the refineries which is why the article says refineries will be badly hit now! so I don't understand how this will make any difference really in fiscal terms & things will be back to square 1 again! is it not?

 

[dharmesh]

Actually I am totally confused what is happening. Can any one please explain this in layman terms.

 

[vijay]

do you guys think even if anything thats gonna happen to lower the margins between any players, would government lower the taxes on fuels, which are major part of the final prices everyone pays on fuels,no its not going to happen with any government planning to letgo their state's major income cut loose.

 

[IndicaDLS2002]

Actually I am totally confused what is happening. Can any one please explain this in layman terms.

What I understand is:

1. Govt know there is no way to save the economy from going into junk status other than cutting the fiscal deficit or removing the subsidy.

2. However the Govt does not want the common man to be impacted so much because obviously it has to contest elections in 2014!

3. It probably sees some inefficiencies in the way refineries are run and wants the refineries to sell at the lower EPP & squeezing their margins, so they see that refineries can be run more efficiently and made to bear some of the impact which is that 10% the article talks about!

do you guys think even if anything thats gonna happen to lower the margins between any players, would government lower the taxes on fuels, which are major part of the final prices everyone pays on fuels,no its not going to happen with any government planning to letgo their state's major income cut loose.

vijay, Good point about the taxes, they will never lower that ever I think!

 

[navnit013]

we consumers are being taken for ride in the name of subsidy. One hand we get subsidy on the other hand we are charged huge amount of taxes.

My stand: I want Govt to give a subsidized fuel for the transport sector by issuing petrocards. For private users, unsubsidized rates please. This would help reduce road density. BUT before doing all this, please improve public transport system.

 

[Rightnow]

..
My stand: I want Govt to give a subsidized fuel for the transport sector by issuing petrocards. For private users, unsubsidized rates please. This would help reduce road density. BUT before doing all this, please improve public transport system.

Dual pricing would not make it any better. Read the below article:

Dual pricing of diesel makes no sense - The Economic Times

It says that- "..dual pricing of diesel has predictably meant huge perverse incentives for bulk consumers of the fuel to simply tap subsidised diesel in the retail market, where it is cheaper by a fifth. The price arbitrage for guzzling subsidised diesel would almost certainly lead to a host of directly-unproductive profit-seeking activities and opacity, meaning corruption and inefficiency."

 

[Rightnow]

Actually I am totally confused what is happening. Can any one please explain this in layman terms.

Hey Dharmesh, I have tried to put diesel pricing in simple terms:

Source: http://ppac.org.in/writereaddata/Price Build up Sensitive Products.pdf




From above table- if Export Parity Price (Row 2) is taken as retail price, then there will be decrease in price to a tune of {44.34 (TPP in Row 3) minus 42.55 (EPP in Row 2)} 1.78 Rs./liter. So accordingly there will be roughly a decrease in subsidy bills to around 20%. But the margin of refineries will further go down (Row 4 will become 42.55 from 44.34).

Its least probable to see the price reduction in near future as this is just another speculation by government. The actual indicator of fuel price is the imported price because India does not produce enough oil (only 20%).

People looking for how diesel is priced this link can be used.

 

[navnit013]

Hey Dharmesh, I have tried to put diesel pricing in simple terms:

Source: http://ppac.org.in/writereaddata/Price Build up Sensitive Products.pdf

View attachment 80018


From above table- if Export Parity Price (Row 2) is taken as retail price, then there will be decrease in price to a tune of {44.34 (TPP in Row 3) minus 42.55 (EPP in Row 2)} 1.78 Rs./liter. So accordingly there will be roughly a decrease in subsidy bills to around 20%. But the margin of refineries will further go down (Row 4 will become 42.55 from 44.34).

Its least probable to see the price reduction in near future as this is just another speculation by government. The actual indicator of fuel price is the imported price because India does not produce enough oil (only 20%).

People looking for how diesel is priced this link can be used.

Good job. That validates my point. We are given the subsidy of 9.16 and 10.19 is collected as tax. Govt is not doing any favor.

The idea behind subsidy is to have a stable fuel price. A fluctuating fuel price can have a -ve effect on a developing economy.