Petrol prices may be hiked by Rs. 3 soon after the elections in Uttar Pradesh and 3 other states. By the month of March 2012, the petrol prices are likely to be raised significantly. At present, IndainOil, who is India’s largest petroleum marketing firm is losing Rs. 3.30 per litre on petrol because of under recoveries. The hike in petrol prices will align it with the global market prices. Therefore, the increase in petrol price appears to be more likely when the oil ministry along with the marketing official meet up for the very next fortnightly evaluation of the fuel prices. In last couple of months, the crude prices are continuously going up, it has now gone from $109 per barrel to $128 per barrel and in no time it will reflect on the prices in the domestic market.
As the petrol prices go up on the scale it will hamper the auto industry more and more, which is already going through a rough patch as far as petrol car sales are concerned. The rise in petrol prices will certainly give encouragement to the negative portion of the auto industry. Right now, the diesel cars are dominating the Indian car market and this could go on in the future as well, but sadly this reign could come to an end as there is a chance of massive excise duty raise at the 2012 Union budget. Therefore, expect a lot of more cars, which would be powered with cheaper and low CO2 emission fuels such as LPG and CNG. India’s largest car maker, Maruti Suzuki India has plans to introduce CNG dual fuel car range very soon and this could inspire the other automakers in the country as well. The soaring loan interest rate is another terrible factor that is affecting car sales badly.