Home Car News Tata invested Rs 1,200 cr for BS6 transition of Tiago, Tigor, Nexon,...

Tata invested Rs 1,200 cr for BS6 transition of Tiago, Tigor, Nexon, etc

Tata BS6 cars investment
Image for reference.

Upgrading to BS6 will cost a lot of money to manufacturers. Though it is difficult to guess the exact amount that will be invested by a manufacturer for meeting BS6 norms, the amount is estimated to be in thousands of crores. Not only the manufacturing plants will need to be upgraded, new components will be needed.

In an interview with The Hindu, Tata Motors MD and CEO, Guenter Butschek has revealed that his company has already invested Rs 1,200 crores in the transition to BS6. This amount was invested in last fiscal, more is expected to be invested this year.

More details about the investment was not revealed. It is not clear as to which engines will be upgraded to meet BS6 and which will be not. But one thing is certain, more diesel engines are expected to get the boot, as compared to petrol engines. The reason, cost of upgrading a diesel engine to BS6 is higher as compared to cost of upgrading petrol engine to BS6.

Tata BS6
New gen Tata cars will be BS6 ready. Image of H2X concept.

Experts surmise that developing diesel engines for small vehicles will not be cost effective. The higher costs involved to make these engines comply with new BS6 emission norms will not justify investments as this would lead to higher price tags which could in turn lower demand.

These predictions were also made by Maruti Suzuki India Limited, the country’s largest automaker, who have announced that the sale of diesel powered vehicles will be stopped from April 2020.

Along with Maruti Suzuki, President of Tata Motors’ passenger vehicles business, Mr. Mayank Pareek also cites concerns over the added investment in development of small diesel engines. However, Hyundai Motors, Toyota and Ford have stated that they would be continuing with development of these diesel engines so as to comply with BS VI emission norms despite higher costs involved.

Tata Motors plans to stop producing small diesel engine cars from April 2020. The  company would think of reintroducing these vehicles only after gauging the market scenario and if there is adequate demand for them. Tata Motors sells diesel variants of most of its models. The Tiago hatchback gets a diesel engine option along with the Tigor compact sedan. The Nexon compact SUV, Zest sedan and the recently launched Harrier SUV all get powered by diesel engine options.

In the overall scenario, the share of diesel vehicles in India has seen a decline from a peak of 58 percent in 2012-13 to 36 percent in the last financial year. This decline was primarily due to the fact that there was a ban on diesel vehicles older than 10 years in the NCR coupled by a narrowing price difference between petrol and diesel. The diesel engine may be cheaper and more fuel efficient but there are higher costs involved in making these engines comply with new BS VI emission norms and if demand dips, this extra investment would not be justified.

Hyundai, Toyota and Ford India will be investing in upgrading their petrol and diesel engines to comply with BS VI emission standards. This will result in a price increase by around 8-10 percent but this will not be exclusively for diesel vehicles alone and would also include the petrol vehicle offerings. Hence every automaker would have to take their own decisions on whether to go ahead with the investment or not.

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