With just over three months for the implementation of BS6 emission norms, Indian automobile consumers seem nervous about future purchases. Initial analysis suggests that consumers could be badly hit by the price hikes of diesel vehicles, commuter two-wheelers, and micro commercial vehicles. While the price impact on gasoline variants of compact cars and SUVs will be smaller in the range of 3-5%, it is the larger diesel vehicles that will see a minimum of an 8-10% price increase when these vehicles transition to BS6. Experts maintain that companies including fleet operators and e-commerce platforms will pass on the increase to customers who will have to bear the brunt. In a nutshell, BS6 vehicles will be more expensive to own and maintain.
What this means in practical terms is that a diesel SUV costing Rs 10 lakh today will become dearer by at least Rs 80,000 post BS6 transition making it unattractive to customers. For a company like Mahindra who has a predominantly diesel portfolio and is facing stress on its sales numbers, this is not good news, say experts. In this scenario, the company is looking towards a quick shift in their strategy by upping their petrol variants. “The gasoline XUV300 has transitioned into a BS6 variant and starting this last quarter (Q4), all Mahindra vehicles will move into BS6", says Vijay Nakra, Head of Sales & Marketing at Mahindra's automotive division.
It is precisely for this reason that companies like Maruti Suzuki have got out of the small car diesel segment from next year onwards and are focusing on gasoline as a preferred fuel. A dozen diesel vehicles are going out of the market and there is no substitute for the low running cost of diesel. Consumers will face the prospect of higher running costs with no diesel alternatives for certain model lines. Even the modern petrol engines, nowhere as fuel-efficient, said Hormazd Sorabjee, editor, Autocar India.
What is interesting is that while a BS6 gasoline vehicle can run on BS4 fuel, the same story does not hold true for diesel. The availability of fuel is important too as the injectors and fuel management systems will be governed by the quality of fuel. Given the high-end technology, the maintenance cost of vehicles will also go up, say experts.
Experts maintain that BS6 involves a host of mechanical and technological changes to emit less and emerge as cleaner vehicles. The BS6 has only 10 ppm (parts per million) of the sulphur content while in BS4, 50 ppm of sulphur content is allowed. This means a shift from BS4 to BS6 will translate into a five times reduction in sulphur content which is indeed a considerable reduction.
Vikas Jain, national sales head, Hyundai Motor India, said while there is no change in mileage or performance in BS6 vehicles, a consumer pays more for refined technology. “A consumer is still ready to buy a BS4 car at discounted prices. Ever since the Supreme Court ruling that cars can be driven to the full product life cycle, there is a surge of customers to buy BS4 cars. Manufacturers have to maintain a delicate balance as they maximize sales of BS-IV, they run a risk of building unsold inventory", he adds. The Korean car major has already transitioned several of its models to BS6 like the Neos and Elantra petrol variants while this month will see the Santro graduating to a BS6 avatar.
RC Bhargava, Chairman of Maruti Suzuki though has a different take on BS6. While he is all for consumers to be conscious of not making life hazardous for the community, he wonders what's the extent of cars that are causing the problems in cities and rural areas “Smaller rural areas where the population of cars is lesser, the pollution will also be lesser", says Bhargava. Rural markets currently account for more than 40% of Maruti Suzuki's car sales. “In such smaller markets where the customer pays more for a BS6 vehicle, the benefit is questionable". He, however, adds that it's difficult for manufacturers to maintain 2 types of vehicles-- one for the city and the other for rural areas. But countries like Japan, where the concentration of cars is high, it makes sense for BS6 cars where it is extremely beneficial for society. Overall Bhargava thinks moving to BS6 is a practical thing to do. And society will benefit in the long run. But paying a higher cost would slow down new vehicle sales.
“On paper, we have galloped onto the latest vehicular emission standard, at par with Europe, in the mission to make the air cleaner. On the road, we will not see much of an improvement in air quality unless other drastic steps are taken on vehicle scrappage, better town planning, better roads, better traffic management and a far better public transport system. But the everyday consumer shall surely cough up more money for the cause", says Avik Chattopadhyay, an independent auto consultant.
One thing is for sure with the latest technology and a longer life cycle, there will be a better resale value of BS6 cars. However, with that will come the burden of an increase in cost, a scenario which will trouble diesel consumers more than gasoline ones.