Maruti Suzuki India is the largest car maker in the country. Today they made a huge announcement, to discontinue all their diesel engine powered cars – including the recently launched 1.5 liter diesel engine.
With the Government of India set to bring in BS VI emission standards by April 2020, the price of small diesel cars will escalate to such levels that it will be totally nonviable. To put this into better perspective, as on date, the price difference between a BS IV petrol and diesel car ranges between Rs.80,000-Rs.1.5 lakhs. However, the price difference between a BS VI petrol and diesel car could go up to around Rs.2.5 lakhs. This, along with the narrowing of cost of petrol and diesel will also see lower demand for diesel cars in the compact car segment.
It is for this reason Maruti had planned to discontinue the 1.3 liter diesel engine from their line-up by April 2020. Maruti Suzuki’s cars, such as the DZire, Baleno and Vitara Brezza, each of which are powered by Fiat 1.3 liter multijet diesel engine, will be on their way out of production by the end of this year.
This is the reason why they developed the new 1.5 liter diesel engine, at a cost Rs 1,000 crore. It was the replacement engine, for Maruti’s diesel cars like Ciaz, Ertiga, Brezza, S-Cross, Baleno, etc. But that is not going to happen. As Maruti has announced they will no longer sell diesel cars post April 2020. This also means all 1.5 liter diesel engine variants which were in pipeline, will not be launched. This includes Ertiga, Brezza, S-Cross, etc.
Mr R C Bhargava, chairman, Maruti Suzuki India, said, “We have taken this decision so that in 2022 we are able to meet the Corporate Average Fuel Efficiency norms and higher share of CNG vehicles will help us comply with the norms. I hope the union government’s policies will help grow the market for CNG vehicles.”
The cost of a BS VI diesel engine could raise the cost of the car by 17-20 percent. This cost if transferred to the customer will deter buyers from opting for diesel cars even if they are more fuel efficient. As a result of this, Maruti Suzuki may take a decision to stop offering diesel engines on all their cars.
Even ahead of the April 2020 deadline, it has been noted that the share of diesel cars has dipped by around 20 percent in the past 9 months. This has not only been noted where smaller cars are concerned but even for utility vehicles. Data from Society of Indian Automobile Manufacturers (SIAM) has also revealed that the share of petrol cars in India has increased from 47 percent in FY14 to 60 percent in FY18 while share of diesel vehicles fell from 53 percent to 47 percent respectively.
Maruti has already stopped production of diesel engine at one of their plant as demand is on the decline. The same is now being used to manufacture petrol engine. Future will see Maruti focus on petrol, CNG, hybrid and electric vehicles.