MUMBAI: It was seen as
highly desirable a couple of years ago. Now, it is a costly and avoidable
proposition for some.
Automakers like Maruti
Suzuki BSE 1.11 %, Tata Motors BSE -0.27 %, Toyota Motor and Honda Motor have
either dropped or are reviewing plans to fit diesel engines in their small cars
in India, said several people associated with these companies.
The key reasons for the
rethink are ambiguity over the use of diesel in passenger vehicles in the wake
of recent court orders and government moves, impending transition to BS VI
emission rules and buyer preference that shifts away from diesel, they said.
Maruti Suzuki is evaluating the possibility
to stop fitting its own 800cc diesel engine, which currently powers the
Celerio, on its cars, three people who are associated with the nation's biggest
car maker said.
Global leader Toyota Motor has already dropped
plans to fit the 1.5 litre GDI diesel engine on upcoming Vios sedan in India.
Japanese rival Honda Motor's India unit, a late entrant into the diesel
segment, studied a 1.2 litre 3-cylinder diesel engine for a proposed small car,
but has now shelved that idea. Homegrown diesel engine expert Tata Motors has
also put its 1.2 litre and 1.6 litre diesel engines on hold.
A Maruti Suzuki
spokesperson said as a policy the company does not comment on future product
plans. Spokespeople for Toyota Kirloskar and Tata Motors too declined to
comment on specific product plans. Honda Cars India didn't respond until press
time on Sunday to an email seeking comment.
These companies were on
an overdrive until three years ago, investing huge money and time to expand
their portfolio of diesel cars to satiate customer demand towards diesel-run
vehicles. But with the government scrapping subsidy on diesel, which reduced
the fuel's price difference with petrol, consumer preference started shifting
back to petrol. Recent moves to discourage the use of diesel in passenger
vehicles have further eroded the demand for cars, especially small cars,
powered by diesel.
"When the 800cc
(diesel engine) was planned, the scenario was exactly opposite. Buyers were
scurrying for every possible diesel engine option and as a small car expert, Maruti
anticipated significant demand for future," said one of the people
associated with Maruti Suzuki. "Today the demand dynamics have altered
dramatically. It appears the 800cc may carry on in small way, but has no future
in BS VI."
The Supreme Court has
temporarily lifted a ban on the registration of large diesel passenger vehicles
in the National Capital Region on condition that a special environment levy is
paid, but has yet to come out with a final verdict. There have also been
efforts, like from the National Green Tribunal and those fighting air
pollution, to discourage the use of diesel.
These have taken a toll
on sales. For instance, the share of diesel models in passenger vehicle sales
has come down to 40-42 per cent from the peak of 58 per cent in fiscal
2012.
With the government
deciding to advance the BS VI to 2020, the cost to upgrade the diesel engine to
meet the guidelines will make diesel cars further expensive. The price gap with
petrol could widen to more than Rs 2 lakh in small cars from Rs 1-1.5 lakh
currently, thereby making it unviable.
Tata Motors spokesperson said the company
recognises that the earlier change to BS6 will impact the future mix of power
system solutions and this is under review as Tata Motors finalizes the product
plans. Having invested strongly in the research and development for future
emission reduction across the entire range of vehicles, the application to our
vehicles is yet to be completed.
"The accelerated timelines for BS6
emissions is demanding a huge R&D effort over the next few years. This is a
complex engineering task and our engineering teams have started working on
critical programmes," added Tata Motors spokesperson.
Experts see the demand
for diesel power train in small vehicles to fall post introduction of BS VI
rules, but expect it to remain strong in SUVs and bigger sedans. Also, diesel
cars will be critical to meet proposed Corporate Average Fuel Economy (CAFE)
rules, which seek to improve the average fuel economy, as diesel gives better
mileage than petrol.
While there are efforts
to offer alternatives like hybrid technology, N Raja, senior vice president of
sales and marketing at Toyota Kirloskar, said diesel would remain an integral
part of any manufacturer, especially in view of future regulations such as
CAFE.
At Maruti, for instance, while the future of
800 cc diesel is being debated on, the company is going ahead with its 1.5
litre diesel engine development, said a person associated with Maruti.
Toyota, meanwhile, is
betting on hybrid vehicles. It is planning to bring a hybrid Corolla Altis to
India and is studying the possibility of a hybrid Vios sedan.
Source : Automakers
are putting brakes on fitting diesel engines in small cars