According to the latest industry estimates, the number of unsold diesel vehicles rose to more than double at 107,818 units in May this year from 52,250 in the same month of 2011.

Auto makers have increased production capacity of diesel by a third in the country due to a sudden increase in demand as the petrol prices increased in the country. The inventory of unsold petrol cars fell moderately by 1.75 per cent to 193,094 units.

The rise in the number of unsold diesel cars come at a time when the government is aiming to impose additional duty on diesel cars in order to negate the impact of misuse of diesel subsidy in the country. The latest figures shows that the share of diesel cars accounted for 44 per cent sales of the overall passenger vehicle sales in May compared to 32 per cent in the same month on 2011.

Meanwhile, the government has asked the members of industry body, Society of Indian Automobile Manufacturers (SIAM) to submit new data to determine the demand for diesel vehicles in the country. Auto manufacturers say that they have invested heavily on the diesel vehicle plans and uncertainty will threaten any future investment from the companies.