Carmakers change strategy as diesel vehicles drive to a dead end in India

Mahesh Trivedi
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With diesel vehicles destined to turn into fossilized dinosaurs following India’s swift switch to the electric era, carmakers are changing tack to wean potential buyers away from what tree-huggers call the “dirty fuel”, and are rolling out more petrol versions.

The share of sales of diesel-powered sedans, hatchbacks and sports utility vehicles (SUVs) has nosedived to just 23 percent from 50 percent only five years ago even as the country’s auto industry is on the cusp of transformation, thanks to tougher emission rules taking effect in 2020 and government plans to see six million electric and hybrid vehicles in the world’s fourth largest market by 2020.


Experts admit that diesel cars are losing steam despite being more fuel-efficient as they are not only expensive to maintain when compared to petrol versions but are also priced higher than their petrol variants by at least Rs 100,000.

Price difference

Add to this the low resale value for older cars as well as the fast-narrowing price difference between diesel and petrol fuels (only Rs 9 now), and you know why even top bosses of Maruti Suzuki and Hyundai, two of India’s largest car makers, recently confirmed that popularity of diesels is on the downward slope due to these economics.

What’s more, Indian courts have been flashing red light to stop vehicular pollution and calm angry environmentalists after a global backlash against diesel-engine cars since German automaker Volkswagen Group admitted in 2015 to rigging 11 million vehicles worldwide to circumvent emission tests.

After all, the country is facing an air pollution crisis that is responsible for 1.2 million deaths a year and costing the economy an estimated 3 percent of GDP.

No wonder, Japanese car maker Toyota is making a shift to a petrol-only strategy for its non-SUV future vehicles in India and its Yaris sedan to be launched next month will not have a diesel variant.

Emission norms

According to N Raja, Deputy Managing Director of Toyota Kirloskar Motor, the group’s Indian arm, after April 2020 when stricter Bharat Stage VI (BSVI) emission norms kick in, the price of diesel engines will see a substantially bigger increase compared to petrol engines triggering rise in the share of petrol engines.

Six Indian cities, including capital New Delhi, are among the 15 most-polluted cities in the world ranked by WHO. (AP)
Six Indian cities, including capital New Delhi, are among the 15 most-polluted cities in the world ranked by WHO. (AP)

Maruti Suzuki, India’s largest passenger vehicle maker, is considering a wider adoption of hybrid technology for its cars in the future and, for the electric push, the company has invested ₹12 billion to set up a new plant to manufacture lithium-ion batteries.

Germany’s BMW and Mercedes-Benz, the only carmaker in India to offer a BSVI diesel car, have decided that all their petrol cars will now be powered by BSVI engines as required under the law by 2020 by which time Mercedes-Benz also plans to introduce electric four-wheelers in India.

Shifting focus

Honda will continue with its diesel engine program for India and is in the process of upgrading its diesel engines to meet BS VI emission norms that come into effect across India, in 2020.

Shifting its focus away from diesel, Swedish luxury carmaker Volvo has strategically decided not to invest in new-generation diesel engines but it will utilise that money in the electrification of cars, and targets to sell one million electrified cars by 2025.

MG Motor India will introduce an electric vehicle within five years of launching its first model in India whose six cities, including capital New Delhi, are among the 15 most-polluted cities in the world ranked by the World Health Organization (WHO) last year.

Huge market

Vehicle manufacturers are also contemplating cashing in on the fact that India is fast emerging as a huge market for connected automobiles with just than 2 percent of all automobiles sold in India have some basic form of connectivity.

Automakers like Mahindra and Tata Motors have started to invest heavily to develop electric cars in India but with less than 0.25 per cent market share for e-vehicles, the country has a long way to go to achieve the all-electric goal by 2030.

And this despite several initiatives by the Indian government and the major automobile players to make the country a leader in the two-wheeler and four-wheeler market in the world by 2020.

All said and done, as many experts say, diesel vehicles are here to stay at least for now as they help in improving the corporate average or the fuel efficiency norms for every manufacturer what with SUVs definitely working better on diesel compared to petrol.

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