The Rs 3 hike in diesel price from Saturday is unlikely to have any

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significant impact on demand for diesel vehicles in view of the fact that there is still a substantial gap between the prices of the two fuels.

However, the hike is expected to add to the overall negative sentiment of the industry, which witnessed single-digit growth last month owing to higher petrol prices, increased interest rates and constantly rising vehicle prices owing to higher input costs.

Diesel, which has found increased acceptance among vehicle users because of the price advantage and for being more fuel-efficient, has led to increased sales of diesel variants. Diesel cars constitute about 32 per cent of car sales, up from 25 per cent three years ago. Diesel fuel prices were raised for the first time since June 2010 (Rs 37.75) to Rs 40.75 per litre. The price of petrol was raised to Rs 63.37 per litre last month from Rs 58.37 in March this year.

“We don’t think the increase in price of diesel will affect diesel vehicle demand, since the price differential has come down marginally to Rs 23 from the earlier Rs 26 per litre. Nevertheless, any price increase has some impact on the consumer and may add to the overall negativity in business sentiment,” said Shashank Srivastava, chief general manager, Maruti Suzuki India.

“The gap between petrol and diesel prices is back to what it was a month ago, so it won’t have any major difference on demand,” said Arvind Saxena, director (marketing & sales) Hyundai Motor.

“Sentiment in the market will definitely be affected, but the hike is marginal and there is no reason why it (hike) can’t be absorbed,” said Sandeep Singh, deputy managing director (marketing), Toyota Kirloskar Motor.

Diesel variants of popular cars like Swift, i20, Dzire and Verna comprise 70 per cent of their sales, the balance being petrol/ CNG/LPG variants. However, the impact may be felt more in the national capital where an additional cess of 2.5 per cent was levied on diesel vehicles, which has pushed up taxes by Rs 20,000 to Rs 80,000.