Cars with higher fuel efficiency and lower maintenance costs are expected to gain higher traction among buyers in India, especially in the sub-Rs 10 lakh category, notes a report of HSBC Global Research. This shift among car buyers will be prompted by higher fuel prices – which have gone up by 35 per cent over the past 15 months – that are impacting the overall vehicle-running costs, the report adds. 

Considering the fact that 70 per cent of the passenger vehicles market in India is still accounted for by vehicles costing less than Rs 10 lakh, the development augurs well for market leader Maruti Suzuki India (MSIL), the report says. 

“Over the past 15 months, fuel prices have gone up 35 per cent, impacting overall vehicle-running costs. Our channel interactions suggest that customers are increasingly becoming considerate of the recent rise in fuel prices,” the report adds. 

Citing the example of Maruti Suzuki’s Swift petrol, the report shows that for a compact passenger vehicle, fuel now accounts for around 40 per cent of the vehicle’s life-time cost compared with 30 per cent in mid-2020. 

“In the current environment, we believe (that) cars that have higher fuel efficiency and lower maintenance costs should gain relatively higher traction among buyers, especially in the less than Rs 10-lakh category, which is still 70 per cent of the market in India,” the report points out. 

“In our analysis, both in absolute terms and relative to competition, MSIL remains the market leader in fuel efficiency and total cost of ownership,” the HSBC report states. 

MSIL’s competitive positioning should remain compelling, given the fact that it has around 65 per cent of the market share in the less-than-Rs-10-lakh price category, it adds.