Here's why the shift to BS-VI entails more than what meets the eye

4. You could also ask the attendant to lock the nozzle in place and let go. Pumps usually have an auto cut-off system that cuts off supply when the desired quantity is reached or the tank is full (whichever comes earlier). (Representative image)

India’s automotive sector is set to embrace its biggest challenge yet in less than a year’s time when they begin to rollout Bharat Stage VI (BS-VI) compliant cars.

But even as manufacturers ensure their production is in line with the transition to BS-VI, there is no certainty yet from the government if BS-VI fuel will be available from January 2020, which is what is needed to avoid any major upset.

The government has committed to the Supreme Court that it will make BS-VI grade fuel available by April 1, 2020. This is also when automakers have been asked to stop selling existing BS-IV vehicles and switch to BS-VI overnight.

This is for the first time that the auto industry will follow a sales-bound rather than production-bound deadline. In previous instances, manufacturers were allowed to exhaust their stock of older generation inventory, well after the onset of the new emission standards.

The transition to BS-VI from BS-IV (India has skipped BS-V) will not be without hiccups. For instance, if BS-VI grade fuel is not available across each of India’s 60,000 fuel filling stations from the agreed date, then this would mean BS-VI vehicles will have to run on the lower grade BS-IV fuel.

“A BS-VI vehicle cannot run on BS-IV fuel for more than one or two full tanks. We cannot sell BS-VI vehicles until BS-VI fuel is available across the country. I will have to start selling BS-VI vehicles sometime in February and start ramping down BS-IV. It is a mammoth task,” said Pawan Goenka, Managing Director, Mahindra & Mahindra (M&M).

Pawan Goenka, Managing Director, M&M

According to manufacturers, there seems to be no issue running BS-VI petrol vehicles on BS-IV fuel, however, diesel will present a different story. Manufacturers say that running a BS-VI diesel vehicle on BS-IV fuel will damage the engine beyond repair.

RC Bhargava, Chairman, Maruti Suzuki, said, “BS-VI car can use BS-IV petrol. But as far as diesel is concerned, it is not the same. The quantity of sulphur in BS-IV fuel is high and this would adversely impact the catalyst, which goes into the BS-VI car. Our first BS-VI car will come in a few months. I am not sure when the diesel BS-VI fuel will be available.”

While the share new diesel car demand is expected to come down to 25 percent during the BS-VI regime from the current 40 percent, a majority of sports utility vehicles will continue to be powered by diesel engines even though small cars will have migrated to petrol.

Rajesh Goel, Senior Vice-President and Director (Sales and Marketing), Honda Cars India, said, “We do not need to upgrade or make any changes to the Civic and CR-V petrol versions because they are already BS-VI compliant models. All other models of Honda will get upgraded to BS-VI before the deadline. Our BS-VI petrol cars will emit BS-IV emissions on BS-IV fuel. Diesel will be a different story though.”

Managing production Another challenge for the industry is to regulate BS-IV grade vehicle production while managing supply of BS-VI grade vehicles. Any miscalculation will either lead to unsold inventory or loss in market share.

To explain, if BS-IV vehicles remain unsold by March 31, 2020, then they will become obsolete the following day. Similarly, if there is not enough stock of BS-IV vehicles with a particular manufacturer, then buyers will jump to a rival manufacturer, leading to a loss in market share.

Unlike the earlier transition in 2017 when manufacturers converted unsold BS-III vehicles to BS-IV, such a conversion won’t be possible for BS-VI, said Goenka. The only route perhaps would be to export those unsold stock, but not all Indian vehicle models are exported.

Fuel at pumps .

“It takes three months for the storage tanks to dispense BS-VI fuel. If you want the BS-VI fuel in January 2020, the fuel pumps will have to start storing the fuel from October itself. The tanks will dispense a mixture of BS-IV and BS-VI fuel, because it is not the case of first-in, first-out (FIFO). For pure BS-VI dispensation, it will take three months. That is what they call as purging of tanks. What that means is that from October 1, there should be only BS-VI fuel in tanks,” said a senior executive of a leading auto company.

As for fuel station owners there is no formal communiqué from the government yet on the issue of availability of BS-VI fuel. “We have not heard anything yet from the oil marketing companies by when they will provide BS-VI grade fuel. We are following the deadline that the government has agreed to which is April 1, 2020. The transition to BS-VI is the Y2K moment for the auto industry. What we need is a certainty in availability of BS-VI fuel,” said a member of Western India Petroleum Dealers Association.

"From January 2020, we will have to start selling BS-VI vehicles in small quantities. By that time we will ramp down BS-IV production and ramp up BS-VI output. If the fuel comes on April 1, we cannot manage that. The latest it should come is January 1, the earlier the better it is,” Goenka added.