8/8/2019 Hybrid Cars - Will They Work for India (Financial
Express) - Karthik and Debarati
1/1
HE last few weeks has beenabuzz with a slew of launches in
the auto industry in India. Twothemes have clearly emerged asthe
next wavelower price andeco-friendliness. The answer
toeco-friendliness has been prettydominated by the hybrid
vehiclesdisplayed at the Auto Expo, NewDelhi, this year by many
players.Following this, of course, havebeen a barrage of articles
on whyhybrids is the technology for In-dia and its impact has been
dis-cussed and debated in various fo-rums. This effort is to assess
thepotential economic and environ-mental impact of hybrids
andwhether this could well be just an-other bright spot among the
nu-merous efforts in this direction.
In its present form, with a likely
price premium of 60% over itsequivalent model in India, we
cansafely assume that hybrids are go-ing to be preferred mostly by
carowners and not by commercialvehicle owners.
Going forward, probably thepremium could reduce to about10% if
the government offers afavourable tax structure and in-centives
akin to the developedcountries like the US. Even this isunlikely to
cause a major shift incommercial vehicle sales unlessfuel prices
increase dramatically.
With this in perspective, wecould calculate the economic im-pact
of hybrids in the Indian con-text. According to recent statis-tics,
there are close to 51 lakhpetrol cars on the Indian roads,consuming
around 315 crore litre
of petrol a year. This translates toan amount of Rs 9,624 crore
inthe import bill.
If we assume an optimistic sce-nario of even 5% penetration
(thepresent penetration in the US isaround 3%) of hybrids in the
nextfew years, the savings would be ofthe order of Rs 240 crore in
the im-port bill per annum (assuming a50% reduction in petrol
consump-tion by hybrids).
We could compare this tothe one time premium
for purchasing hy-brid cars. Assum-
ing a base model price ofRs 10 lakh, a 60% premium wouldamount
to an investment of Rs 6lakh more per car. Therefore, for2.5 lakh
(5% of petrol cars on theroad) cars the total price premiumwould
add up to Rs 1,500 crore.
This number is a staggeringsix times more than the savingsin oil
import per annum. In otherwords, if the government wereto subsidise
the premiums insome form, it would wipe off thesavings of up to six
years or prob-ably a couple of years if a moder-ate oil price rise
were to be takeninto consideration.
Justice would not be done ifwe do not look at the en-
vironmental impact of using hy-brids as well. Emissions
frompetrol cars alone are 22.03 mil-lion tonne of carbon dioxide
ayear. Going by the same assump-tion of 5% hybrid vehicle
penetra-tion, there would be a reductionof 0.55 million tonne in
carbondioxide emissions per annum (as-suming a 50% reduction in
emis-sions through hybrids). At 0.23%of the mammoth figure of
244.8million tonne of total vehicularcarbon dioxide emissions per
an-num, this impact probably is notsignificant. While on the
subject ofenvironmental impact, it is alsocritical to look at the
battery packof hybrids which is made of nickel-metal-hydride.
Battery disposal is somethingthat clearly lacks regulation and
itis not uncommon to see batteriesdisposed off in public
dustbins.Unlike Western countries wherethere are strict rules and
regula-tions for disposals that are strictlyenforced, India has a
long way togo. These need to be addressedbefore introducing new
sourcesof battery waste.
There need to be initiatives tofind alternate sources of
vehicularenergy both from an economic aswell as environment
perspective.In this effort, hybrid technologyundoubtedly is a step
in the rightdirection. But, in the short term,theres still ground
to cover tomake this workable in the Indiancontext and probably
there areother easily surmountable means
to achieve the same.If better road infra-
structure in citiescould lead to a savingof even 10% of
drivingtime, we could safelyassume that the sav-ings in fuel would,
atthe least, be 5%. Androad infrastructure isnot something thathas
been discovered inthe last few years. Incountries like Singa-pore,
despite similarweather conditions asin India, it is rare, if ever,
to see pot-holed roads. Similarly, if of thetwo lanes available on
a road, oneis not occupied by parked vehi-cles or vendors, we
straightawayhave 100% more capacity.
This again is more of an en-forcement of zero tolerance
ac-cepted worldwide rather than aconcept of the future. This list
cango on with other low hangingfruits like, improved public
trans-portation, enforcement of emis-sion norms and strict traffic
regu-lation, which would directlyimpact economics as well as
envi-ronment as compared to whathybrids can bring in the shortterm.
This is something which thepolicy makers should keep inmind while
planning the future ofIndian transportation.
Ramamurthy is associate directorand Ghosh is business
analyst,Synovate Business Consulting
Unlike theWest, wherethe rules
for batterydisposal arestrict, Indiahas a longway to go
F I R S T S T O P F O R M A R K E T I N G , A D V E R T I S I N
G A N D M E D I A
4 THE FINANCIAL EXPRESSTUESDAY, FEBRUARY 12, 2008 BY INVITATION
| KARTHIK RAMAMURTHY& DEBARATI GHOSH
On a scale of 1 (low) to 5 (high), howimportant are the
following factorswhen you are deciding where todo your grocery
shopping?
Good value for moneythe No 1 influencer of grocery
store choice in India
Good value for moneythe No 1 influencer of grocery
store choice in India
Moving up thevalue chain
S
T
A
T
I
S
T
I
C
S
S
P
E
A
K
According to The NielsenCos latest ConsumerConfidence Survey,
anoverwhelming 91% ofIndians who weresurveyed voted for goodvalue
for money as themost important factor
while selecting a grocerystore. The second attributewas better
selection ofhigh quality brands andproducts (79%) followedby
location (54%) andavailable parking space(54%). Price,
promotionsand perceptions also helpconsumers reach a
decision about a store,says the survey.
India
China
65
26
612
27
57
40
39
11
6 21
17
23
18
2117
22
33
9 15
25
34
19
7
1 2 3 4 5
Hybrid cars willtheywork
forIndia?Thereisaneedtofindanalternatesource of vehicular
energy
50
35
13
12
18
25
8
20
3057
29
10
Korea
HongKo
ngJap
anIndi
aChin
aKor
ea
HongKo
ngJap
an
24
21
24
19
Moving up thevalue chain
18
GOOD VALUE FOR
MONEY
USES RECYCLABLE
BAGS
