The reducing disparity in petrol and diesel prices has been dampening the sales of diesel vehicles over the past few years and now, NGT (National Green Tribunal) has dealt an even more serious blow to the auto industry by deciding to phase out diesel vehicles in Delhi. According to Ministry of Heavy Industries and Public Enterprises, total diesel vehicle sales (passenger cars, UVs and vans) have been registering YoY decline for the past three years.
Several popular models which are available only with the diesel engine or predominantly preferred in diesel variants are set to take a hit in sales. Supreme Court is likely to enforce an interim ban of diesel vehicles with engines larger than 2.0-litre for the next three months in Delhi.
NGT diesel ban in Delhi is expected to be a serious dampener to the recovering Mahindra & Mahindra.
The court is expected to pronounce its temporary decision today and if larger diesel engines get banned, Mahindra and Mahindra would emerge as the worst hit car maker due to the decision. While the diesel UV specialist is witnessing a sales recovery on the back of hot selling TUV300 with 1.5-litre diesel engine, a vast majority of its sales still come from models with diesel engines displacing more than 2.0-litres (XUV500, Scorpio, Bolero and Xylo). Dr. Pawan Goenka, Executive Director, M&M, stated that Delhi contributes to nearly 7% of passenger vehicle sales in the country and the company receives around 2% of sales from the region.
Other popular diesel vehicles which could face a negative impact due to SC’s decision are the Toyota Innova, Fortuner, etc. All the luxury car makers who rely on diesel vehicle sales will find it difficult to maintain sales momentum. In fact, BMW which doesn’t have mainstream petrol models would face tough times since it will be cut off from the nation’s largest auto market.