There is nothing to indicate that the recent rise of Rs 5 per litre in the price of diesel has dampened SUV buyers' enthusiasm. But will they still queue up in front of SUV showrooms when, and if, the entire subsidy on diesel is removed?
Without that course correction, car makers' research and development (R&D) work will be further distorted.
The world over, petrol cars far outsell diesel cars. So, a large part of the research dollar goes into petrol engines.
In India, the situation has been reversed: diesel cars today outsell petrol cars 4:1. So, car makers have had to disengage from their global research and work afresh on diesel technologies for India.
This disrupts the economies of scale that come from research synchronised across markets.
Image: The Range Rover Evoque.