Oil on the boil

Hi All!

We all agree that increasing petrol prices is a big headache for us. Now how to commute? The biggest auto players are working on fuel efficient model. I came across a detailed report on this subject on livemint online journal. Take a look.

Oil, currently hovering around $120 per barrel, is set to cross $200 barrel in the next 6-24 months due to lack of adequate supply and increased demand from China for the 2008 Beijing Olympics, say analysts. The same set of analysts from Goldman Sachs had predicted oil would cross $100 a barrel when it was trading at close to $55 a barrel.

Costly ride: Fuel efficiency is also of concern in India where driving in cities involves frequent starting and stoppages, low-speed, bumper-to-bumper traffic and potholded roads.

And so, it’s hardly a surprise that around 84% of auto industry executives polled by audit and consulting firm KPMG last year cited fuel efficiency as an extremely important factor in their future strategy.

“We are clearly seeing huge global warming issues and oil at a $100 is not academic any more,” Rajiv Bajaj, managing director of Bajaj Auto Ltd, had said in a January interview, before he unveiled the prototype of the car, when quizzed about his vision for the yet-to-be-finished car. “I really don’t think it’s important whether a car costs a lakh of rupees, or Rs1.5 lakh because the cost of the car contributes to only a third of (cost of) ownership.’’

He wasn’t available for comment for this story.

Bajaj, 41, has always said that given the rising price of oil, it is necessary to give consumers a vehicle whose cost of ownership doesn’t pinch. When he first announced plans to make a small car, he seemed to care much less about the initial price tag of the car and seemed to veer instead towards a small car, which, while offering limited speeds, would do the job just fine by using a smaller quantity of fuel to run a longer distance.

Indeed, small and cheap cars are somewhat in favour.

Tata Motors Ltd, India’s largest auto maker by revenues, unveiled the Tata Nano earlier this year, after spending some four years in a bid to build the country’s cheapest car. The Tata Nano, with a price tag of around $2,500, has set the benchmark for other cheap cars that want to capture the mass market for individual four-wheel transportation.

Mahindra and Mahindra Ltd, for example, is promoting its Scorpio as a fuel-efficient sports utility vehicle (SUV) in the US with the tagline, “SUV without guilt”. In the UK, for example, Fiat offers about £1,000 (Rs80,800) worth of fuel to customers who buy the Grande Punto small car.

Lawmakers across the world are also getting stricter on fuel efficient norms. In the European Union, for example, legislation considered for carbon dioxide emissions — that are closely related to fuel efficiency — will have lighter taxes for smaller cars.

In India, the primary market for the Bajaj-Nissan-Renault car, customers are protected from oil price surges to an extent, because petrol and diesel prices are subsidized by the government. Still, customers here are among the most value conscious drivers in the world.

“In India, the mindset is such that a certain section of customers ask about the fuel efficiency even when they are buying a (Rs)80 lakh car,” said Rishi Goel, who heads marketing at the local unit of German luxury car maker Audi AG. The cheapest cars in this category are priced above Rs25 lakh and are typically bought by millionaires.

Let’s see how soon can we come up with a car that is immune to the fuel price fluctuations.

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~ by gizmoghost on May 26, 2008.