Auto industry today reacted with disappointment at the Supreme Court's order to ban registration of diesel SUVs and cars with engines above 2,000 cc, in Delhi and NCR till March 31 next year, saying the decision "isn't optimal".
The industry players also called for a comprehensive view of various factors causing pollution to deal with the problem.
"So, even if we believe the decision on diesel vehicles isn't optimal, we'll honour it and develop vehicles that comply with their stipulations," Mahindra Group Chairman Anand Mahindra tweeted.
He said: "I have always believed that the Supreme Court is an institution that sustains our faith in social justice and democracy in India."
Sharing similar views, Toyota Kirloskar Motor Vice-Chairman Vikram Kirloskar said: "There are various sources of pollution which can be measured using a scientific source apportionment study.
"To improve the air quality from vehicle point of view we must take a comprehensive view of various factors causing pollution."
The worst hit by the Supreme Court order are German luxury carmaker Mercedes-Benz and Tata Motors-owned JLR as their entire diesel model range is powered by engines above 2,000 cc.
Mercedes-Benz sells a total of 24 models in India starting with the A-Class, priced at Rs 27.5 lakh, going up to Rs 2.7 crore for the S63 AMG coupe (all prices ex-showroom, Delhi).
Tata Motors-owned JLR's Jaguar line up ranges from the Jaguar XF price starting at Rs 47.67 lakh to Jaguar F-Type which is tagged at Rs 1.88 crore (ex-showroom Delhi).
The Land Rover vehicle models start from the Range Rover Evoque to the top end Range Rover priced between Rs 50.5 lakh and Rs 3.93 crore (ex-showroom Delhi).
Delhi, along with Mumbai, is the largest market for luxury vehicles in India.
According to industry estimates, the capital city accounts for about 20 per cent of total luxury vehicle sales in the country.
German luxury carmaker BMW is less affected as only six of
its 20 models sold in India are impacted by the ban. These include the 5 Series 530D, 6 Series 640D and X640D.
BMW's model range in India includes hatchback 1 series, sedans 3, 5, 6 and 7 Series, along with SUVs X1, X3, X5, sports car M Series and hybrid model i8, which are priced between Rs 29.9 lakh and Rs 2.29 crore (ex-showroom Delhi).
Rival Audi is the least affected as only two of its models -- SUV Q7 and sedan A8 -- come under the ban. The company has a total of 13 models in India, starting with the A3 priced at Rs 25.5 lakh, going up to sports car R8LMX which is tagged at Rs 2.97 crore (ex-showroom Delhi).
Homegrown utility vehicles major Mahindra & Mahindra will also be hit hard by the ban as its popular models, including the XUV500, Scorpio, Xylo and Bolero, have engines above 2000 cc. These vehicles are priced in the range of Rs 6.6 lakh to Rs 17.36 lakh (ex-showroom Delhi).
Toyota Kirloskar Motor (TKM) will also be hit as two of its best selling models, multi-purpose vehicle Innova and SUV Fortuner are affected. These are priced between Rs 10.47 lakh and Rs 27.02 lakh (ex-showroom Delhi).
Tata Motors' utility vehicle Sumo Gold, SUV Safari and MPV Aria are also affected by the order. These models are priced between Rs 6.52 lakh and Rs 15.52 lakh (ex-showroom Delhi).
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Later in the day, Mahindra & Mahindra (M&M) said in a regulatory filing that the Supreme Court's order affects the sales of some of the company's products in NCR.
"The vehicles affected represent about 2 per cent of the company's total monthly sales. The company is in the process of evaluating various options to work within the framework provided by the Honourable Supreme Court," it said.
The company respects the order and does hope that these actions help to clean Delhi air, it added.
"The company would hope that at the end of the interim period of March 31, 2016, the judiciary and the regulators would look at the impact of these measures and take a holistic view on improving the air quality of Delhi, taking into account the overall impact of each action," it said.
M&M Executive Director Pawan Goenka told analysts that the company's dealerships in the NCR have an inventory worth Rs 100 crore.
Commenting on the matter, a Tata Motors spokesperson said: "While we will see some impact on our sales in the three-month period specified in the order, our continued foray into petrol segment, as shown by recent launches, will stand us in good business stead over a period of time."
The company shares the concern for environment, but it remains convinced that it is imperative this is seen in the larger context beyond just one quarter, to ensure environment friendly initiatives are undertaken at all levels with a holistic approach that looks at causes of pollution from all sources, it added.
As stated earlier, the long term regulatory regime should focus on the overall emissions-control roadmap rather than any specific fuel or technology, it said.
The proposed ban on the 2,000 cc cars will mean the go-to-market strategies at the top-end of the market will change dramatically as Delhi is the most important market for such cars, said Kumar Kandaswami, Senior Director, Deloitte in India.
While the reason for such action is well-understood, the industry would perhaps worry about the timing when there were signs of sustained growth after many months, he added.
"From a customer standpoint, there is likely to be a shift away from diesel, given the perceived uncertainties," Kandaswami said.
