Maruti, Hyundai say diesel PV sales may dip with stricter emission norms

Leading carmakers Maruti Suzuki India and Hyundai Motor India on Tuesday said the percentage of diesel cars in passenger vehicle sales is expected to come down with stricter emission regulations, increasing the cost of ownership.

On a day when Union Road Transport and Highways Minister Nitin Gadkari spoke of the need to levy an additional 10 per cent tax on diesel-run vehicles to help cut emissions, although clarified that there is no proposal under the government consideration to impose such a tax, the automakers pointed out that already sales of diesel passenger vehicle have been declining.

"It is a natural phenomenon that as the emission regulations keep tightening, the cost of acquisition will keep increasing, and this process (decline in diesel vehicle percentage) will be much faster going forward," Maruti Suzuki India Senior Executive Officer (Marketing & Sales) Shashank Srivastava told reporters here on the sidelines of SIAM annual convention.

Most manufacturers have announced that they will move out of diesel, he added.

In 2013-14, the diesel percentage in the passenger vehicle (PV) industry was 53.2 per cent. It has come down to 18.2 per cent in the April-August period this fiscal, Srivastava said.

With the price difference between diesel and petrol narrowing, he said the advantage of running cost enjoyed by diesel vehicles is minimal.

On the other hand, he said the cost of acquisition of a diesel PV has gone up compared to its petrol counterpart with the price gap now at up to Rs 2 lakh compared to about Rs 90,000 to Rs 1 lakh before.

Going forward, he said, the cost of conversion to meet the emission norms may be quite expensive, and with the cost of acquisition going up, saving is not sufficient, and "therefore, economic logic does not exist" to buy a diesel PV.

Hyundai Motor India COO Tarun Garg said the company's diesel share to its overall portfolio also came down to 18 per cent in the January-August period this year from earlier levels of 30 per cent due to changing customer choice.

On the future of diesel vehicles, he said the company's responsibility would be to provide whatever the customer wants "as long as it is meeting all the norms", and it would do so in the future too.

When asked if the automaker supported a change in the taxation on diesel vehicles, he said, "We have always believed that it is the government's job. We will do whatever the government want us to do, and we have always complied with all the laws of the land".

Garg also asserted that a transformation towards greener mobility is already happening, although it will not be overnight.

In a release, Ashok Leyland MD & CEO Shenu Agarwal said the statement made by Gadkari at the SIAM annual convention highlighted the government's push and ambition for faster adoption of alternative fuels in the auto industry.

"While the government is already taking initiatives, we believe some additional subsidies on alternative fuel will accelerate the adoption and provide much-needed impetus to the industry," Agarwal added.