BS VI emission norms will be kicking in from 1st April, 2020. Almost all OEMs are currently busy in bringing in upgrades to their models and in clearing off the BS 4 inventory from their pipelines.
Industry estimates suggest that upgrading a diesel motor to BS 6 would cost somewhere around INR 1-1.5 lakhs. Considering the price and market dynamics, some OEMs have planned to discontinue diesel engines, especially in smaller cars. Japanese carmaker, Toyota is the latest OEM which has decided that it will not be selling small diesel cars in the future.
Toyota’s Indian sales are heavily reliant on diesel engines. In fact, between January and September 2019, it sold around a lakh vehicles and diesel contributed to 85% of the total sales. However, majority (around 60% of the total) of Toyota’s sales came in from large utility vehicles, namely the Fortuner and Innova.
Looking at the limited contribution of diesel in small cars, Toyota has decided to not to upgrade its 1.3 litre diesel engine which currently powers cars like Liva, Etios Cross, Etios and Corolla. Larger vehicles like the Fortuner and Innova will continue to have BS6 compliant diesel engine options in the future.
The Etios lineup has already aged, hence it is clearly justified to not to invest any further in the product. The discontinuation of diesel motor in Corolla too shall not affect a lot, as overall sales of the segment have come down to around 500-600 units per month. Clearly, an investment required to upgrade the diesel motor would not be viable for the Japanese carmaker.
Toyota isn’t alone, as far as discontinuation of smaller diesel vehicles is concerned. A similar approach has also been taken up by India’s leading automaker, Maruti Suzuki and the French carmaker, Renault.
Companies believe that a price bump of around INR 1-1.5 lakh will work out to be significant for customers in the small car segment and deter them from their purchase. Instead, customers would prefer a BS 6 petrol model, which would provide a better ROI.
Diesel had become the preferred fuel type for Indian car buyers around 2012-13. At its peak, diesel contributed to around 58% of overall sales. However, since the deregulation of diesel prices, market share of diesel powered vehicles has fallen down to around 33% (September 2019).