Home >Companies >News >Production of diesel vehicles may fall to lowest in a decade

MUMBAI : With new emission norms driving up prices of diesel cars and market leader Maruti Suzuki India Ltd exiting the segment, the share of diesel vehicles in India’s total passenger vehicle production may fall to the lowest level in a decade in 2020, global information provider IHS Markit said.

Among passenger vehicles with gross weight up to 3.5 tonnes to be produced in India in 2020, only 18.5% will be diesel, down from a record 47% in 2013, IHS said in a forecast. The data includes export volumes and domestic sales.

“Drop in the production of diesel cars would be prominent in the A+, B and B+ segments, which can also be categorized as the passenger vehicles shorter than four metres in length. However, despite losing some volumes to petrol, utility vehicles larger than 4 metres would predominantly remain diesel," Suraj Ghosh, principal analyst (powertrain forecast), IHS Markit, said in an interview.

Competitors will try to take full advantage of Maruti’s no-diesel period to expand their diesel volumes, Ghosh added.

About 23% of Maruti’s 1.7 million passenger vehicles sold in India last fiscal year were diesel models. Diesel vehicles in BS-VI regime could cost 10-12% more due to new technology and additional critical parts. In contrast, petrol cars cost just 20,000-25,000 more.

“Per-kilometer running cost for a CNG car is nearly half of that of a diesel car. A CNG vehicle makes more economic sense than diesel. Therefore, there is no reason why people would not adopt CNG if it is making economic sense," Maruti Suzuki’s senior executive director (engineering), C.V. Raman said, justifying the company’s decision to vacate the diesel segment.

However, Hyundai Motor India Ltd has spotted an opportunity in Maruti’s exit. India’s second largest carmaker, which saw diesel-to-petrol mix of 30:70 in 2019, expects the share of diesel vehicles to rise in 2020. However, two people familiar with the matter said this would depend on the impact of supply chain disruptions due to the Covid-19 outbreak. The company declined to make an official comment on its fuel mix for this year.

Still, Hyundai remains bullish on increasing sales of diesel cars led by the BS-VI-compliant 1.2 liter and 1.5 liter diesel engines.

Meanwhile, attempting to balance its diesel-heavy portfolio to prepare for BS-VI, Mahindra and Mahindra Ltd (M&M) has discontinued its 1.2 liter diesel engine and has developed an all-new mStallion family of petrol engines across 1.2 liter, 1.5 liter and 2 liter displacements. These engines will also be deployed for SsangYong and Ford vehicles in an attempt to spread out development costs.

M&M has only one petrol engine currently, 1.2 liter, which powers its compact sports utility vehicle XUV300. Veejay Ram Nakra, chief of sales and marketing, automotive division, M&M, said: “Over the years, M&M has predominantly been a diesel manufacturer. With the launch of XUV300, we had planned to introduce our first major offering in the gasoline segment. The petrol variant contributes over 30% of total XUV300 sales. In fact, in metro markets, such as Delhi, Mumbai and Bengaluru, our petrol share has already grown to 50%-plus in recent months."

Tata Motors Ltd declined to comment. A spokesperson of Ford India Pvt. Ltd, which retains diesel variants across its BS-VI portfolio, said the fuel mix could tilt towards petrol due to non-availability of some popular models in diesel.

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