Get App

Co-Partners

Associate Partners

you are here: HomeNewsBusiness
Last Updated : May 01, 2019 11:59 AM IST | Source: Moneycontrol.com

Corporate Corridor | Maruti's diesel masterstroke may have a lesson for one and all

Transforming transport is never straightforward. For the sector to go forward, everyone needs to be on board.

Moneycontrol Contributor @moneycontrolcom

Padmaparna Ghosh

Maruti Suzuki India's decision to phase out diesel cars by April 2020 is, very simply, a textbook example of internalising the true environmental and social costs of an industry.

The fundamental reason behind the world's various ongoing environmental crises is that the cost of pollution or public health has never been accounted for. In other words, though we have long known the deleterious impact of air pollution driven by vehicular emissions, we have for decades run amok in pleasant delusion, happy to exchange future health problems for clear and present convenience. Now, for the first time, the joyride comes with a costly ticket.

Maruti's decision is also emblematic of how the right combination of crucial factors can drive change that has previously seemed impossible. In the case of diesel vehicles, air pollution and its public health outcome had many spin-offs – real-life experience of environmental damage, consistent advocacy and activism (from the general public, NGOs, media and courts), cumulative impact of steady disincentives (against diesel), and a strong, mandatory regulatory environment with consistent and clear signalling.

What is happening across the world and the local market as far as this decision goes? The world over, diesel is increasingly getting unattractive. There is a momentum against diesel.

About Maruti’s decision, Hem Dholakia, Senior Research Associate, Council on Energy, Environment and Water, a Delhi-based not-for-profit research institution, says: "It is a bid to stay relevant in a changing environment, and continue to compete in markets of future. India is experiencing a strong need to transition to stringent vehicle emission norms due to obvious public health reasons, and the measures are paying off."

And the impetus against diesel has been consistent and fast. Diesel car sales are dropping phenomenally – from 2012, when diesel car sales had peaked to 50-55 percent of all car sales, to 2018 when it was 19 percent. 2012 was also the period of peak oil price, and a huge gap between petrol and diesel prices.

For consumers, there was always an extra incentive – diesel was more economical, and car manufacturers dashed to add more and more models to the small and mid-sized diesel car field. The cost-conscious consumer always chose diesel.

Meanwhile, fuel price differential narrowed considerably – nearly Rs 6.50 per litre today, from Rs 27 in 2014, as air pollution intensified and so did awareness.

More importantly, citizens “felt” the impact of pollution in their regular lives, associating diesel with pollution. And progressively, there have been policy decisions that have led to uncertainty around diesel cars.

"A diesel car will have to be disposed of at 10 years, there is little to no resale value. In Delhi NCR, luxury diesel cars with more than 2000cc engine have to pay the environment pollution charge," says Anumita Roy Chowdhury, Executive Director, research and advocacy, Centre for Science and Environment, a Delhi-based environmental advocacy group.

Maruti’s disruptive decision is a culmination of India leapfrogging in vehicle emission norms, from Bharat Stage (BS)-IV to BS-VI, the equivalent of Euro-VI, the most advanced pollutant emission regulation. This has changed the cost of small and mid-sized diesel cars. In order to meet BS-VI norms, the new generation emission control system involves advanced and complex technologies.

While it is feasible to package all this into a small or mid car, the cost is a runaway element, that too in a price-sensitive segment. The low-priced diesel small car is dead. And Maruti is acknowledging it.

The automaker knows and has seen it. The company’s share of diesel car sales has come down from 45 percent in 2014-15 to just 23 percent in 2018-19. Who would want to pay a higher cost for a diesel car when the fuel cost benefit is shrinking?

This is here Maruti's announcement reflects the true internalisation of social and environmental costs into a product, led by strong policy and advocacy towards a goal of cleaner air and better health.

Maruti's decision reflects a global understanding, primarily Europe-led, that diesel as a fuel needs to be tapered off -- diesel exhaust is a definite carcinogen. Europe, which in a bid to control CO2 emissions, went all in for diesel vehicles -- they have better fuel efficiency -- a decade ago, but it soon realised that the after-effects of dieselisation were nasty. And today, numerous European countries are racing to phase out diesel cars and cities are imposing a slew of measures to limit them within their geographical limits.

But transforming the transport sector is never straightforward, as the recent experience of the French government at the hands of the gilets jaunes (yellow vests) has shown. The announcement of a fuel price rise was met with intense, and occasionally violent, street protests - the price rise was rolled back.

What the increased tax failed to acknowledge was that rural public transport had been ignored and led to a situation in which rural citizens had no or little access to many public services. The French government, in order to quell the anger, has now unveiled a bill which will mend the decision, in areas where inadequate public transport has made people reliant on cars.

Transport, apart from being complex and layered, is closely linked to our ideas of autonomy and prosperity. In a way, in our modern lives, our transport options outline our ability to get to work (our ability to earn), leisure (our emotional well-being and social participation), emergency help (our health), and go to schools (a family’s future). These choices are inherently tied to how free we feel to lead the lives we want to, a requisite for liberal democracies.

And how we handle transport changes is going to be crucial, as the French gilets jaunes experience shows. For these protesters, the increase in fuel prices without concomitant improvement in comfortable and affordable transport options is understandably unfair and discriminatory. It is a lesson for all countries. For transport to go forward, everyone needs a seat on the bus.

(The author is a freelance writer. Views expressed are personal)
First Published on May 1, 2019 10:42 am
More From
Loading...
Sections
Follow us on
Available On
PCI DSS Compliant