Post SC relief, big diesel car makers wary of fuel policy

Post SC relief, big diesel car makers wary of fuel policy

By SHAILENDRA TYAGI | New Delhi | 21 August, 2016
With the lifting of the eight-month-long ban, sales of diesel-run luxury cars are expected to crawl back in Delhi and NCR. PIC COURTESY: www.cardekho.com
Analysts expect India to soon become the fourth largest auto market in the world and the certainty in regulations would only expedite that process.
Though luxury car makers have welcomed the Supreme Court’s order of re-allowing the sale of big diesel cars in Delhi and NCR, yet the industry feels a desperate need to sit with policymakers to bring about certainty in regulatory norms. A clear understanding on India’s long-term fuel policy and its attendant emission norms are also being sought. Last week, the apex court reversed its earlier order of banning sale of passenger vehicles having a diesel engine capacity of 2000 cc and above in India’s largest luxury cars market on the plea that diesel engines pollute the city more. The court still feels diesel is an important polluting agent and, therefore, has imposed 1% cess as a pre-condition to reverse its earlier order. “A 1% cess does not perturb the industry much, but what did hurt them most was the randomness of the (initial) order that was probably passed in haste,” said Deepesh Rathore, an auto expert with Emerging Markets Automotive Advisors.

Analysts claim that modern diesel engine with over 2000 cc of capacity pollutes very little. They argue that these modern engines are developed by technology leaders like Mercedes, BMW and such likes. Therefore, the initial ban order looked ironical as it targeted the best available (innovations) engines in the market. Such order actually discourages innovations and the crucial investments, especially at a time when PM Narendra Modi is espousing the cause of “Make in India”. Many have withheld their planned expansion in India while preferring to gauge the unfolding regulatory landscape in India. The industry can certainly put up with stricter regulations “Provided those are communicated to them well in advance,” Rathore said. The industry is not worried about technology and it can certainly work as per the expected regulations.

Mercedes, whose base engines start from about 2100 cc and therefore was most grievously hurt by the court’s order, is expected to come back to competition.

With the lifting of the eight-month-long ban, sales of diesel-run luxury cars are expected to crawl back in Delhi and NCR. Mercedes, whose base engines start from about 2100 cc and therefore was most grievously hurt by the court’s order, is expected to come back to competition. Toyota, whose best selling vehicles have engine capacities of above 2000cc, is also expected to gain from the lifting of the ban. Audi and Volkswagen were lucky to survive the onslaught as their base engines were cleverly designed at 1995 cc. Analysts expect India to soon become the fourth largest auto market in the world and the certainty in regulations would only expedite that process.

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