Toyota has been taken aback by the number of orders it has received in India for its hybrid car, Prius. The company had expected to sell a meager 12 units per month when it launched the world’s largest selling hybrid car in March this year. However, demand has zoomed to 80 units during the last three months, that is, more than double the company’s initial estimate.
The target of 12 cars per month seemed justified at the time of the car’s launch because of the poor demand for the Honda Civic hybrid which was launched two years ago. Even though the Civic was priced lower than the Prius Honda managed to sell only 60 cars in six months before withdrawing the model from the market. The Honda Civic was priced at $45,725 while the Toyota Prius is priced at around $55,600 (1 US$ = 47.07 INR). This drastic change can be attributed to various reasons.
High Oil, Gas Prices
Two years, ago when the Honda Civic was launched, the government was in the election mode. It had just completed its five year term and was vending out concessions to the voters and the fuel prices were lower with national oil companies bearing loss of millions of dollars. Once the government got re-elected it started raising fuel prices and has done that several times in last one year.
The government has also formed a committee comprising of high-ranking cabinet ministers for the purpose of de-regularization of the fuel pricing. Under this mechanism, only the central government could decide the price of petroleum products like gasoline, kerosene and natural gas. With the proposed de-regularization the power of deciding these prices would be transferred the oil companies which can revise them every 15 days according to the international crude oil prices. So the prices of gasoline are set to increase by almost ten percent possibly within few weeks.
When the petrol prices went up last year, people moved to compressed natural gas (CNG). CNG powers the entire public transport bus fleet in the Indian capital, New Delhi — one of its kind in the world. CNG is cheaper and cleaner and gives better mileage than gasoline. However, its prices too have increased significantly in the recent past. Thus promoting consumers to look for cheaper and alternate fuel options such as batteries.
Subsidies by the Government
In the recent few years, the central government has started offering subsidies on electric cars. One of the most famous electric cars in the world today is the Reva manufactured by the Reva Electric Car Company based in Bangaluru, India. Although the car has become very popular abroad, it has failed to make a mark in the Indian market.
There was an international hue and cry when the TATA Motors launched the Nano (world’s cheapest car) in 2008. People across the world voiced concerns about the resulting carbon emissions when millions of Indians would buy the Nano. But even in the absence of an outright success of the ‘People’s Car’, the Indian auto market is buzzing. Last month, India’s largest car maker Maruti Suzuki recorded its highest ever sales.
A More Informed Consumer
One of them could probably be that today consumers have more information about the deteriorating state of the environment and concerns about one’s individual carbon footprint is increasing. Data released by the company shows that most of the consumers are doctors, industrialists and top executives, that is the people having the most and the easiest access to information.
Although the the government provides subsides for electric cars buyers there still isn’t the adequate infrastructure for charging the batteries that could attract the consumers, plus to own a car is a status symbol in the Indian society and small cars or domestic brands do not match up to that criteria. So go for the next best thing, a hybrid which comes from a well-known international brand.
Hat tip: The Business Standard
The views presented in the above article are author’s personal views and do not represent those of TERI/TERI University where the author is currently pursuing a Master’s degree.
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