Strict European-style emissions rules will force up car prices, warns Indian carmaker Maruti Suzuki. This will give another blow to the automobile industry. Since the year 2000, India has been adopting European emission and fuel regulations for four-wheeled light-duty and for heavy-duty vehicles as well.
RC Bhargava, Maruti Suzuki India Ltd Chairman, said the impact of the new rules will be felt as demand will fall further and there will be a noted decline in the industry. “The industry view is that it’s already suffering a decline because of COVID, and on top of that, we add further to the cost of vehicles because of new regulations.”
Last week, the automakers urged the government to defer tougher emissions standards, which are due to be implemented in two stages in April 2022 and then in 2023. The new rules will require carmakers to cut emissions about 13% to 113 grams a kilometer. This is part of India’s push to tackle the world’s worst air pollution. According to the Centre for Science and Environment, by 2025, India will have up to 20 million old vehicles nearing the end of their lives, causing huge environmental damage.
Analysts say the changes will not be easy as it comes at a tough time when the auto industry is trying to make a comeback from its worst-ever slowdown driven by the COVID-19 pandemic. Latest figures from the Society of India Automobile Manufacturers show that passenger vehicle sales fell 2% and overall production declined 14% in the year ended March 2021. Bhargava said any increase in car prices could deter India’s price-sensitive drivers. “Just 5% of cars sold are priced above Rs 1.5 million. The nation’s per capita income of only Rs 2,000 per year puts cleaner, but more expensive, electric cars beyond the reach of most consumers,” he said. “It will be difficult for automakers to pour resources into the new technology considering the industry invested as much as Rs 900 billion to transition to current emission standards, which set out a 68% reduction in nitrous oxide gases.”
The executive highlighted that Maruti doesn’t make any electric vehicles because of their cost and the country’s sparse charging infrastructure. “Hybrid models, improved technology for cars running on compressed natural gas and more efficient gasoline cars will be enough for Maruti to meet the new requirements.” Bhargava said a decline in the auto industry not only hurts carmakers, but the entire economy.
“If growth doesn’t take place that it will be counterproductive to do this. What is the use of getting European standards into India if people aren’t able to buy the cars?” Bhargava said this is the reason the industry wants the new regulations to be deferred so that there is no counter price increase.