Buying a car, particularly with a diesel engine, will further tighten the pockets of customers from the next financial year as the second phase Bharat Phase VI (BSVI) emission standards kicked in.
The rules require cars to meet Real Driving Emissions (RDE) standards, which measure pollutants emitted by cars as they drive on the road, as opposed to lab tests.
The norms could increase the production cost of diesel cars by almost Rs 75,000-80,000 and petrol cars by Rs 25,000-30,000, analysts said.
That’s because carmakers will have to optimize engines, install advanced aftertreatment systems that reduce nitrogen emissions and install particulate matter (PM) sensors, industry insiders say.
The move could prove to be a blessing in disguise for hybrids as the price gap between diesel and hybrids should narrow due to the price hike. Car makers like Maruti Suzuki, Toyota Kirloskar Motor and Honda Cars India have recently launched competitively priced hybrid models.
“Hybrids enjoy several advantages over diesels in that NVH and ride quality are better. It is also very environmentally friendly with better fuel efficiency. The price difference compared to the corresponding petrol cars for the hybrids is slightly higher, but with the expected increase in cost, even this difference will decrease. This should further push the consumer trend towards hybrids,” said Shashank Srivastava, chief executive, Maruti Suzuki Indian hybrid models (mid-size SUVs) claim a fuel efficiency of 28 kilometers per liter compared to 18 km per liter for diesel.
Maruti launched the hybrid and mild hybrid variants of the Grand Vitara earlier this month. It received orders for nearly 70,000 units. Of these, about 25,000 are for the powerful hybrid version. RDE will also further skew demand in favor of gasoline and CNG models, Srivastava noted.
Commenting on the impact of RDE on diesel vehicles, Vijay Nakra, President, Automotive Sector, Mahindra and Mahindra, said, “Due to these changes, material costs for both petrol and diesel engines will be marginally to moderately impacted.”
Puneet Gupta, director, S&P Global Mobility, said with the likely softening of commodity prices, auto companies may end up absorbing half the cost and passing the rest on to buyers, leading to a price hike of Rs 30,000-40,000 for diesel cars and Rs. 15,000-20,000 for petrol.
Nakra said that given the dynamic situation with commodity prices and MPG (platinum group metal), the company will decide on the exact impact on the cost of materials closer to the implementation date.
He said all M&M vehicles (passenger and commercial) will comply with the upcoming BS 6.2 norms for diesel, petrol and CNG models as per the regulatory timelines.
“With regulatory changes and increased focus on the tailpipe, diesel is unlikely to last long and will come under further pressure beyond 2027,” Gupta said.
Even without RDE, diesel’s share of total sales had declined over the previous decade. It stands at 19 per cent, compared to 58 per cent in the financial year 2011-12 (FY12). “With the new norms, its fall will only increase,” said Shrivastava.
This is not limited to cars. As recently as three years ago, diesel accounted for 88 percent of the entry-level SUV segment (including Brezza, Nexon, etc.). That has now been reversed, Srivastava said.
A Tata Motors spokesperson said the company has “always supported the government in its drive towards safe and environmentally friendly mobility and will comply with all regulations set by the government”.
On the eve of the implementation of BSVI norms, several car manufacturers, including Maruti Suzuki India, pulled the plug diesel cars in the mass segment even as they have retained a diesel presence in the premium SUV segment.
https://www.business-standard.com/article/automobile/diesel-car-costs-likely-to-rise-nearly-rs-80-000-with-bsvi-phase-2-122101701150_1.html
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