Petrol shift to hurt Tata Motors; less pain for M&M, Maruti

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26 Aug, 2025 12:21

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Moneycontrol BureauBrokerage firm CLSA believes Tata Motors passenger vehicles business could be adversely affected by a growing shift towards petrol vehicles going forward.

The Delhi government recently banned over 10 year old diesel vehicles and CLSA believes this will accelerate the on-going shift from diesel to petrol vehicles in India apart from giving a slight uplift to near-term demand.

"About 70 percent of Tata's passenger vehicle sales are diesel. We see a high probability that customers might shift from Tata's diesel cars to the petrol cars of other carmakers instead of Tata's own petrol cars since Tata is not known for its petrol cars," said the CLSA note to clients.

The report says resale value of diesel vehicles has dropped sharply post the Delhi ban, and that consumers in other parts of India might also fear similar bans.

CLSA sees the shift having limited impact on M&M even if some customers chose petrol variants of rival companies, since utility vehicles account for just 31 percent of the company's volumes.

Maruti will be the least affected, feels CLSA.

" Around 77% of Maruti's diesel car sales are in the Swift and DZire models. We believe these customers will most likely switch to the petrol Swift/DZire," says the CLSA report.

CLSA feels Maruti may not benefit much either because buyers of the diesel variants of Swift/DZire's competitors (Honda Amaze etc) may not move to the petrol Swift/DZire.

Excerpts from the report:

-         As per media reports, there are ~119K diesel PVs and ~40K diesel CVs older than 10-years on Delhi's roads. If we assume that 50 percent of these get replaced by new vehicles, then FY16 PV/CV industry growth could see a 2-3 percent uplift.

-         77 percent of Maruti's diesel car sales are in the Swift and DZire models. We believe that it is very unlikely that customers of diesel Swift/DZire will move to the petrol models of other automakers.  These customers will most likely switch to the petrol Swift/DZire.

-         100% of M&M's PV sales are diesel and it is possible that some of M&M's customers might move to the petrol variants of competitor models.