The Future of Diesel Cars in India

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    The Future of Diesel Cars in India

    The headline of this article may put you in surprise, if you have been living under a rock or have been too busy driving your diesel-powered car. The reality is that diesel cars are facing a stiff challenge in the face of the BS VI norms put to order by the Government of India.

    Bharat Stage VI norms, commonly referred as the BS VI norms, are in line with the Euro VI norms. Basically, this is a government regulatory framework which aims to decrease the vehicle-emitted pollution levels by putting an upper limit to the permitted pollution levels of both petrol and diesel powered cars.

    Under these norms, the Fiat 1.3 multi-jet diesel engine, Mahindra & Mahindra’s 1.2 litre diesel engine, Volkswagen’s 1.5 litre diesel engine and Toyota’s 1.5 litre diesel engine – will all go out of production by April 2020. Why? Because they will not be compliant with the BS VI norms and all these companies have individually decided that it would be way too expensive to upgrade these engines in order to make them compliant with BS VI norms.

    What does this mean for you?

    For years, Indians have chosen diesel cars over petrol cars for one simple reason – the relatively lesser cost of refuelling. The diesel car on road price points have been lower than petrol prices for years now. Although some customers complain about the higher maintenance costs and comparatively lower performance of diesel cars, it all gets covered up by the best mileage numbers and the money saved on refuelling.

    Swift, Dzire, Baleno, Brezza, Bolt, Zest, Polo, Vento, Rapid and KUV – all under the ₹10 lakh category have garnered their own fan-following among car owners, thanks to their relatively affordable price-tags and the availability of their diesel variants, which add to the savings of the owner in the long run. When diesel engines become essentially noncompliant to BS VI, it will mean that the diesel engines of these cars would not be available in the near future; not until the manufacturers come up with an innovative solution.

    So, no more diesel cars in India?

    That is the conclusion where several automobile market pundits and car reviews providers have landed at. It is far from reality. Diesel car contributions in the overall market have already been declining for several months now. The BS VI norms will accelerate the decline, but diesel cars will not go extinct.

    The simple reason for this is the fact that the cost of upgrading a diesel engine in an under-₹10 lakh car, to meet the BS VI norms comes to anywhere between ₹1,30,000 – ₹1,50,000. So, if you are buying a ₹3 lakh car, you will not be comfortable paying 50% more for the same car with the exact same car specification. That said, if this bump is given to a car that was already costing more than ₹30 lakh, it becomes bearable for the consumer. In short, diesel cars will retain their dominance in the premium cars, automatic hatchbacks and SUV segments.

    Okay, so, should I buy a car which is not complying with the BS VI norms right now?

    The market will take some time to come up with the replacement products for the variants that will not be available from April 2020. Since India is still a free market economy, nothing and no-one stops you from buying a BS IV compliant car, up until April 2020 deadline.

    That said – does it make logical sense? That requires some critical examination of facts. If you are one of the more realistic buyers in the market and are planning to save money – this is the ideal time to start thinking about buying a new diesel car. Why? Because what do you do when you have a ton of inventory and the government puts a tight deadline on you, for clearing it – you make the offer more attractive for your customers offer heavy discounts and cheap deals. This may include reduced prices, more affordable instalment schemes, free accessories or longer tenure of free service – by all means, you will get more benefits as a buyer because the sellers are under tremendous pressure to take care of the inventory by April 2020.

    Now, you may wonder – what about the spare parts?. A market of this size and scale will take its time to react to the entire policy change. Hence, you can stay assured that there will be services and spare parts available for your new car in both the primary and secondary market for the age of your car.

    In Conclusion…

    Following the implementation of BS VI from April 2020 you should expect the new car prices in India to go up by at least 15% – 20% on the current showroom prices. This would make a difference to you, if you are looking to buy car under the price-point of ₹10 lakh and are ready to vigorously compare cars. Hence, as soon as the new BS VI compliant variants hit the market, you should be ready to pay more for pretty much the same specs. That said, you can make a clever move and focus on buying a car, petrol or diesel, before the new and compliant variants come in – because right now, the market is under pressure to take care of the huge inventory of popular cars that are already out of production or will be in production over the next few months.

    Besides this, you can always call up Mr Musk and order a Tesla…Along with a few charging stations.

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