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Auto industry to suffer huge losses due to Delhi diesel car ban

SIAM to address impact of global economy on auto industry for 2013

With automakers having invested heavily in diesel technology, the recent NGT order banning registration of diesel vehicles in the national capital will have a catastrophic effect on automakers.

The impact of NGT Diesel car ban will be adversely felt by automakers such as M&M, Toyota and Tata Motors with such large volumes of diesel variants on offer. These automakers have also invested heavily in diesel technology, thereby ensuring that diesel cars of today are greener and cleaner than ever before.

M&M has a wide range of diesel engined vehicle and in fact have no petrol variants of models such as the XUV 500, Scorpio, Bolero and Xylo. This is the same case with Toyota and Tata Motors who have also paid more emphasis to diesel variants in their company lineup.

Delhi diesel car ban

Petrol car sales will receive a boost thanks to Delhi diesel car ban.

On the other hand, Maruti Suzuki India Limited, Hyundai Motors and Honda Cars will benefit from this order. These automakers have a wide range of petrol variants and hence have little cause of concern where dip in sales are concerned. Maruti, Honda and Hyundai derive 55-70% total sales volume from sale of petrol vehicles while industry wise petrol and diesel ratio is currently at 50% to 48%. Maruti Suzuki is the largest automaker with a share of 60% to 25% ratio in petrol and diesel passenger vehicles.

The National Green Tribunal has banned registration of diesel vehicles in the National Capital thereby causing a jolt to automakers. This NGT Diesel car ban is as an interim measure with the next hearing scheduled for January 6, 2016. During this time, automakers will suffer loss of around 10,000 to 20,000 diesel vehicles and could result in extensive losses in the passenger vehicle segment, which could be extended even further, unless the order is overruled by the court.

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Automakers themselves are confused as they there have been many scenarios which have risen due to this new ruling, and they do not know what to do. For example, there are hundreds of customers in Delhi who have made full payment and are awaiting delivery of their diesel vehicle; what happens to those who have already been delivered diesel vehicles and are awaiting getting it registered; what happens to the year-end stock of diesel vehicles which the dealer wanted to sell on an immediate basis as the new year is approaching? There are many such questions which have not only put the manufacturer, but the dealer, their channel partners and the end customer in a difficult situation.

Mahindra and Mahindra Executive Director Pawan Goenka said- “As far as instruction to dealers is concerned, we are confused. We don’t know what we have to do in Delhi.”

Maruti Suzuki India Chairman R C Bhargava said he would first like to look at the order in detail before commenting anything on the matter.

Renault India Operations Country CEO and MD Sumit Sawhney said, “Customers are confused. At this stage, everything is at a standstill because of this knee jerk and ad-hoc step (of NGT). We are waiting and watching.”

Hyundai Motor India Senior Vice-President (Marketing and Sales) Rakesh Srivastava said: “The channel partners are faced with a challenge of addressing customer concerns on registration and delivery of vehicles for which payment has already been accepted.”

Society of Indian Automobile Manufacturers (SIAM) said – It is not proper to stigmatise diesel technology based on the mis-information spread by the interested lobbies, especially when these comply to all the Government of India notified norms. Moreover, Diesel technology is highly fuel efficient and has upto 25-30% lower CO2 which is a global warming gas. While the Hon’ble Prime Minister of India is talking about reducing our carbon footprint by 33-35% at the COP 21, we are moving in the opposite direction by stigmatizing diesel which can offer us lower CO2 in our transport economy. Converting all diesel vehicles to petrol would drastically increase our CO2 emissions, consumption of fossil fuels and thereby potentially compromising the country’s energy security.

Renault Kwid – Photos

via DNAIndia


About the author

Pearl Daniels

Pearl Daniels

Former freelance writer, Pearl Daniels is in the auto industry since 2011, having established herself as a widely read staff writer since 2013. Her keen eye for industry news, daily need to break down latest events, and quest to not miss a single launch detail, gives you the most refreshing morning news on weekdays.

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