BackDiesel engines could vanish from automakers’ portfolios: KPMG survey
More than every second executive surveyed said that diesel will be the first traditional powertrain technology to vanish from automaker's portfolios
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Mumbai: Diesel will be the first traditional powertrain technology to vanish from manufacturers’ portfolios globally, according to KPMG Global Automotive Executive Survey 2017.
The trend, KPMG pointed out, is quite alarming for several manufacturers and regions considering their expected diesel penetration rates for 2023, such as Indian manufacturers with an overall diesel share of more than 60%.
To be sure, following deregulation in diesel prices in 2012 and the Supreme Court’s stricture on diesel cars in December 2015, share of diesel powered cars in India have been coming down steadily.
Share of diesel cars dropped to 26% in the first eight months of the current fiscal from 37% a year ago, according to industry body Society of Indian Automobile Manufacturers, or Siam.
The rapid shift prompted automakers, particularly homegrown ones like Mahindra and Mahindra Ltd and Tata Motors Ltd, which relied heavily on diesel in India, to revisit the engine technology in favour of gasoline. Both firms are now also offering petrol option in their newly-launched models.
More than every second executive surveyed said that diesel will be the first traditional powertrain technology to vanish from automaker’s portfolios, according to the KPMG report.
“Diesel is meant to be dead, at least socially inacceptable," it said. But diesel is not easy to erase from the market due to typical applications such as long-distance heavy truck engines. Diesel will still be a viable option in many application areas and fewer emerging countries. Besides, for applications like medium and heavy trucks, there might not be any short -term alternative, it said.
Sugato Sen, deputy director general at Siam, said considering that diesel penetration in western Europe is much higher, they are the ones who first need to look for a solution. One of the challenges, which companies in India will face when the industry switches to a stricter Euro-VI norms is bringing diesel technology in small car given the limited space in such cars.
India will move up to the toughest emission standards of BS-VI from the current BS-IV by 2020, skipping an intermediate level, transport minister Nitin Gadkari said in January 2016. The decision, prompted by the poor air quality in New Delhi, will make cars, sports utility vehicles (SUVs), trucks and buses more expensive.
Auto companies and parts makers doubted whether they would be ready in time. Auto firms, parts makers, and oil refiners will end up spending anything between Rs70,000 crore and Rs90,000 crore on the change.
Siam’s Sen said that one cannot do away the diesel technology as it helps in reducing global warming. This can only be done if alternative technologies like fuel cell and solar electric vehicles come up in a big way and find a wider acceptability.
As per the findings of the KPMG survey, battery electric vehicles (BEVs) will fail due to infrastructure challenges while fuel cell electric vehicles (FCEVs) are seen as the real breakthrough for electric mobility. “The majority of consumers do not yet embrace the concept of electric vehicles because the most essential requirements for electric vehicles are not met yet," it said.
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