Much before talk of diesel car ban, sales down to 17.6% of total volume [details]

The news about an Indian government committee suggesting a ban on diesel cars from 2027 has sowed the seeds of uncertainty in the minds of diesel car buyers today, said top industry officials.

Car buyers will think twice before writing out a cheque to buy a diesel car, they added.

The government has suggested a ban on diesel-powered cars by 2027 in cities with a population of over a million people.

"The impact on the diesel vehicle industry will be from now, and not from 2027," Shashank Srivastava, Senior Executive Officer (Marketing & Sales), Maruti Suzuki India Ltd, told IANS.

"Nobody buys a car for two/three years," Suyash Gupta, Director General, Indian Auto LPG Coalition, told IANS.

Interestingly, sales of diesel vehicles have been on the decline for the past several years.

Except for sports utility vehicle (SUV) and multi-purpose vehicle (MPV) models, diesel-powered vehicles are on the decline and are being replaced by hybrid/ petrol/compressed natural gas (CNG) models, industry officials said.

Already many car makers in India like Maruti Suzuki India Ltd, Renault and others have stopped rolling out diesel cars.

The major diesel car players in India now are Mahindra & Mahindra, Toyota Kirloskar Motor, Kia India, MG Motor and Hyundai Motor India Ltd.

Going by industry numbers shared by the officials, banning of diesel vehicles by 2027 need not be a pipe dream.

"The share of diesel cars in the total industry volume is on the decline. Ten years back, diesel cars accounted for about 58.4 per cent of the industry volume. In April 2023, the share was just 17.4 per cent. Last year, it was 18.6 per cent," Shashank Srivastava, Senior Executive Officer (Marketing & Sales), Maurti Suzuki India Ltd, told IANS.

What is the reason for this decline?

The economic logic for a diesel car is no longer there owing to the marginal difference in the retail price between petrol and diesel and the high upfront price of diesel cars.

According to Srivastava, the SUV/MPV segment has a major presence in the diesel segment. Within that, the midsize SUVs have 54 per cent volume share.

Srivastava said diesel cars world over are disappearing and manufacturers are not investing in them.

"With the decline in market share of diesel-powered vehicles, attention is shifting towards gasoline and alternative fuel vehicles such as CNG and electric cars. Diesel shares in the total Indian passenger vehicle market has reduced from about 36 per cent in 2018 to 18 per cent now, which means less than one of the five cars sold in India is diesel-powered. The share of petrol engine-powered cars has grown from 54 per cent in 2018 to 60 per cent now," Venkatram Mamillapalle, Country CEO & Managing Director, Renault India Operations, told IANS.

"Demand for CNG has also grown and it contributes almost 11 per cent to the total passenger vehicle sales now, from about 7 per cent in 2018. While CNG vehicles have lower emissions and operating costs compared to gasoline and diesel cars, limited fuelling station availability and high conversion costs pose challenges. Also, increasing cost of CNG in recent times has put pressure on the demand for CNG variants," Mamillapalle added.

According to Mamillapalle, by the end of 2019, Renault India had ceased the use of K9K diesel engines and subsequently halted production of all diesel vehicles.

"The decision was made to align with the transition to the BS VI emission norms mandated by the government. These regulations establish strict standards for exhaust emissions, requiring vehicles to implement advanced technology to curb pollutants," Mamillapalle said.

Will the industry be ready to roll out non-diesel cars by 2027?

"It depends on several factors, including the specific target year, the current state of the industry, and the level of support from the governments. The industry has already made significant progress in developing and producing non-diesel cars, and major automakers have majority of sales coming from gasoline variants. While electric vehicles (EV) have also gained momentum, but the challenges remain, including the need for more charging infrastructure and other infrastructure-related eco-system and battery technology improvements to increase driving range and reduce costs," Mamillapalle said.

Last year, 52,000 units of electric cars were sold, which was about 1.2 per cent of the total industry volume. In April 2023, the percentage went up to 2 per cent which proves that EV adoption is increasing, said Srivastava.

Adding further, he said once the EV sales volume touches 3-4 per cent of the industry sales volume, the growth will start accelerating. The industry expects EV sales to touch 3-4 per cent in 2024-25.

By 2030, the total car industry volume is expected to be six million units out of which the share of EVs is expected to be one million.

Be that as it may, the question that remains unanswered is the fate of liquified petroleum gas (LPG) powered cars.

Welcoming the committee's recommendation of banning diesel vehicles from 2027 as it would create space for other fuels, Indian Auto LPG Coalition's Gupta said there is a need for other viable fuel by 2027 which is comparable to diesel.

"As regards LPG, it is the third-most widely-used automobile fuel in the world. In India, auto LPG is not a subsidised fuel. It is popular in southern and western parts of India. Cost-wise it is 40-50 per cent cheaper than petrol," Gupta said.

According to him, the role of vehicle makers and the government for the spread of LPG as a fuel is important.

(With inputs from IANS)