Mahindra accepts performance hit due to E20 use amid Gadkari’s political campaign claim

New Delhi: Mahindra & Mahindra Ltd is set to become the first Indian automaker to issue an advisory on the use of E20 ethanol-blended fuel, acknowledging that older vehicles may face reduced performance. The company clarified that while E20 is safe, engines not calibrated for 20% ethanol mixing could see a dip in output.

“Mahindra is drafting an advisory on the E20 blended fuel, which should reach customers next week,” Nalinikanth Gollagunta, chief executive officer of the automobile division, said on the sidelines of the Society of Indian Automobile Manufacturers (SIAM) annual convention on Thursday.

The company later issued a statement detailing the issue. “Vehicles produced post 1 April 2025 are specially calibrated for E20 fuel to ensure acceleration and fuel efficiency. Earlier produced vehicles, whilst being completely safe to drive, could see a minor variation in either acceleration or fuel efficiency depending on driving behaviour. As a responsible OEM, Mahindra will honour all warranty commitments to its customers on account of E20 fuel usage in our vehicles.”

The announcement came hours after Union road transport minister Nitin Gadkari called the criticism of E20 a politically motivated smear campaign. Gadkari has called the campaign against fuel blending an attempt by the “petroleum lobby” to stall the country's efforts to reduce dependence on oil imports.

Over the last two months, several consumers have taken to social media to flag concerns about the increasing blending of ethanol in petrol, suggesting that it is reducing vehicle performance.

Some of Mahindra's older models, like Scorpio and Bolero, can see a higher impact as they have been selling for longer.

On the sidelines of the convention, the country’s second-largest carmaker, Hyundai Motor India’s chief operating officer, Tarun Garg, dismissed any concern about the use of ethanol-blended fuel in cars, saying that the issue has been closed and there is no major problem.

This comes more than a week after SIAM held a press briefing on the E20 issue and said that there are no concerns about the safety of cars.

Ethanol blend

During the briefing on 30 August, auto lobby representatives said that while E20 can hurt mileage, it is safe to use in vehicles.

"Millions of vehicles are plying on E20 for quite some time now. Not a single vehicle breakdown or engine failure has been reported," P.K. Banerjee, executive director at SIAM, said during the briefing.

Mahindra, Hyundai, and the lobby representatives all accepted that the use of ethanol-blend fuel will not affect customers' warranty claims.

Ethanol blending first began in 2003, but has increased significantly over the past few years. Mahindra only sells sport utility vehicles (SUVs).

Setting aside any concerns about ethanol use in fuel, the country's top auto leaders focused on the announcement of a cut in the goods and services tax (GST) during the annual SIAM convention.

Senior executive officer for Marketing and Sales at Maruti Suzuki, Partho Banerjee, mentioned on the sidelines of the Siam convention that the GST cut will lead to a surge in domestic sales of small cars and other types of vehicles, with at least 10% growth expected for small cars in the next financial year.

GST reform focus

The government cut GST from 28% to 18% on cars under 4 metres that use petrol engines below 1,200cc or diesel engines below 1,500cc.

“It is a big reform that the government is doing,” Banerjee said, adding that the bookings of its vehicles are progressing strongly since the end of last month.

Hyundai’s Garg is also expecting strong growth in the industry, with earlier expectations of the industry only about 1-2% in this financial year over the last year. The company expects the next five years to have 5% compounded annual growth rate.

“There is a huge swing from -2% degrowth to 5% growth, which will take place soon,” Garg said at the conference.

Mahindra and Mahindra also noted during the summit that it hopes the GST cut will lead to it having multiple volume drivers in the portfolio.

Mahindra's share price declined by 0.2% on Thursday, as against a 0.3% fall in Nifty Auto.