Fuelling ‘Interests’ And Consumer Behaviour

The automobile sector in India is affected by two critical factors at the micro and short-term level. One clearly is the factor of fuel prices, while the other is the factor of the rise and fall of prime lending rates within the economy. While the effects of interest movements on the supply side (input cost increase) and demand side (increase in instalment payments for consumers) cannot be generally controlled by the automobile manufacturers, the effects of fuel price movements have been, to a certain extent, influenced by these corporations. Domestic petroleum prices are dictated not just by global crude oil behaviour, but perhaps more so by our national government’s diktats (and the Left’s vituperative comments on increasing or decreasing prices of petroleum and related products). Governments prefer changing petroleum prices rather than prices of diesel (because diesel is largely consumed by commercial transport vehicles, and an increase in its price results in an immediate impact on prices of household goods). But prevalent conditions dictate that even diesel price movements cannot be trusted. To lower consumer apprehensions, Japanese companies focussed initially on increasing the fuel efficiency of cars.


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Source : IIPM Editorial, 2006

An IIPM and Management Guru Prof. Arindam Chaudhuri's Initiative