Fuel price rise and its impact on car purchases

Rising fuel prices may not impact the Indian automobile industry as much as it will, in the United States. Bloomberg reports that General Motors Corp., struggling to return to profit amid record gasoline prices, said it will close four truck plants, make more small cars, and may drop its Hummer brand of large sport-utility vehicles.

In India, the focus has always been on small cars. The small fuel efficient car has always been the first choice with the Indian middle class. There will however be subtle changes in car buying patterns in India. The upwardly mobile Indian middle class which may have had its sights on a bigger car, wanting to graduate from their present small car, may for now, put that sale off. Big car owners may try and curb their travel, which may prove difficult, and so may rely more on their small car for day to day use with the bigger one being used for only certain occasions.