Demand supply economics tells us that when price of a product goes up, the demand for the substitute product goes up too. And that is exactly what happened. With the hike in petrol prices, the demand for diesel cars went up. But why is there a discrepancy in the prices of the two fuels? While the price of petrol is reaching sky limits, the price of diesel is still stable. Shouldn’t the prices of the fuels be linked to the international market?
That is the question posed by the Japanese automaker, Toyota and the company feels that the way government is trying to control the diesel prices is not a healthy sign and is trying to imbalance the world car market. Buyers are favoring diesel cars over their petrol counterparts after the substantial petrol price hike. Compare the two and it is clear that the per kilometer running cost for a diesel car is less than half of what it would be in case of a petrol car. Auto majors are shifting their focus towards producing more variants of diesel models.
Well, the thought doesn’t deter the Japanese carmaker from shifting their focus too towards the diesel models. Toyota is expanding its portfolio of diesel variants by importing diesel engines for its models like Liva Hatchback, Etios sedan, Innova MPV and Fortuner SUV. The company has plans to set up a diesel engine plant too though no concrete statements have been made regarding the same. With the Rupee depreciating further, Toyota has announced a hike of 1% on the diesel Etios and diesel Innova, while the diesel Etios Liva and Fortuner are now costlier by 0.5%. Toyota plans to increase exports to counter loses due to exchange rate fluctuations.