Tata, Mahindra, MG, Toyota oppose Maruti's CAFE 3 proposal | Report

Maruti has argued that small cars have become unaffordable for entry-level buyers due to rising prices.

With the Corporate Average Fuel Efficiency 3 (CAFE 3) norms all set to be implemented in April 2027, Tata Motors, Mahindra & Mahindra, Toyota Kirloskar Motor and JSW MG Motor India have opposed Maruti Suzuki India's call for easing of fuel efficiency standards for small cars, according to a report by The Economic Times.

The CAFE norms, which are primarily aimed at reducing carbon dioxide (CO2) emissions from vehicles, have been introduced in two phases so far. While CAFE 1 standards arrived in 2017–18, the CAFE 2 norms became effective in 2022–23.

The passenger vehicles (PVs), powered by petrol, diesel, LPG and CNG, as well as hybrid and electric models, having a gross vehicle weight of less than 3,500 kg, are covered under CAFE norms.

For reference, the amount of fuel a car consumes is directly related to the amount of CO2 it emits.

As per the report, stakeholders have been asked by the Ministry of Heavy Industries (MHI) to submit their views on implementing separate CAFE norms, depending on the size of the vehicle.

Tata, Mahindra, Toyota and MG have reached out to the industry body Society of Indian Automobile Manufacturers (SIAM), opposing Maruti's proposal for easing of CAFE norms for small cars, weighing less than 1,000 kg, to prevent a decline in their sales.

Maruti has seen a consistent decline in the share of small cars in its volumes. The entry-level models like the Alto and the S-Presso made up just 5.4% of Maruti's PV wholesales in June. The company's domestic PV volumes declined 13.3% y-o-y during the month.

The Brezza-maker's Senior Executive Officer for Corporate Affairs, Rahul Bharti, argued that the slowdown in PV sales was largely due to a sharp decline in the smaller-segment cars.

"Historically, PV sales used to grow at 1.5 times the GDP growth. But now, even after 6.5% GDP growth, the car market is nearly flat. This is because the once mass small car segment is not participating in the growth at all. This is clearly an affordability issue," he said.