Tata Motors, Hyundai have decided to continue making diesel car for as long as there is demand for them.
Two of the top four Indian carmakers will not follow the market leader into abandoning diesel variants. Tata Motors and Hyundai, who together control over 20 percent of the domestic car market, have decided to continue making diesel car for as long as there is demand for them.
On the sidelines of announcing its March quarter results, Maruti Suzuki announced its plans of discontinuing manufacturing diesel versions of its small cars due to an expected rise in their prices following the switch to Bharat Stage VI (BS-VI) emission standard from BS-IV.
As per estimates, diesel vehicle prices for the hatchback segment will shoot up by a minimum of Rs 1 lakh under BS-VI. Last financial year, the share of diesel in India’s passenger vehicle segment stood at around 35 percent.
Speaking to Moneycontrol, Mayank Pareek, president (passenger vehicle business unit), Tata Motors said, “Each one has the right to do what it feels is right. As a full mobility solutions provider we will provide diesel, petrol, electric, CNG and the customer is in the best position to take a decision and we should not make a decision on their behalf. So we will continue to provide diesels”.
At the stand-alone level Tata Motors is pumping in Rs 5,300 crore as capital expenditure (capex) in FY20 which is much more than the average spends per year in the last few years. Of this Rs 1,300 crore is for BS-VI upgrades alone. The company has been incurring capex of Rs 4,000 crore since the last few year.
At the launch of the Venue compact sports utility vehicle (SUV) Hyundai officials declared that of the 15,000 prebookings received for the vehicle about 35 percent or 5,250 bookings were for the diesel variants. The Venue will rub shoulders with India’s best-seller in the segment Maruti Suzuki Brezza, which is sold only with one diesel engine.
S S Kim, managing director and CEO, Hyundai Motors India said that Hyundai will continue to bring diesel engines to India even in BS-VI versions despite the anticipated price increase. For bigger SUVs diesel engines are the most preferred choice. The company is targeting leadership position in the compact SUV segment with the Venue
The third automaker in the top four is Mahindra and Mahindra (M&M). More than 90 percent of the Mumbai-based company’s passenger vehicle portfolio is made up of UVs. The company has added petrol engines as an option in almost each of its new launches but maintains that it will continue with diesels as long as there is demand for it and there are no plans to abandon them abruptly.
Other players like Honda and Ford have also spoken in favour of continuing with diesels even after the onset of the BS-VI norms which is April 1, 2020. Ford would in fact source diesel engines from partner M&M for at least a couple of its SUVs.Market watchers say that this will most certainly put pressure on Maruti Suzuki’s overall market share as consumers will shift their preferences to rival brands in search of diesel options. Though the market leader is restricted from upgrading the Fiat-sourced 1.3 litre diesel engine to BS-VI standards, it has the option of continuing with the in-house developed 1.5 litre seen on the Ciaz and Ertiga.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.