As if the ban on registration of diesel vehicles of 2000 cc and above in the National Capital Region was not enough to dampen sales of diesel vehicles, the recent decision of the National Green Tribunal to impose restrictions on diesel vehicles in some cities in Kerala on the same lines, and extending it to top two polluting cities across every state, has come as a big blow to car manufacturers.
The narrowing of price differential between petrol and diesel over the past few years has already reduced demand of diesel vehicles vis-a-vis petrol. However, since the debate over perceived high pollution level of diesel forced regulatory intervention towards the end of 2015, the decline in sales of diesel vehicles is believed to have gathered pace, prompting concern from prominent voices in the automobile industry.
Commenting on the shift towards petrol vehicles due to the ban on diesel vehicles with engine displacement of over 2000 cc, Honda Cars India senior vice-president (marketing and sales) Jnaneswar Sen said sales of the diesel variant of popular sedan City declined 12% in the January-March period of the year despite the fact that the car’s diesel engine is of the capacity of 1.5 litres and not directly impacted by the ban.
For the City, which is the highest selling product for the Japanese company in India, its domestic sales volumes declined from over 8,000 units in April 2015 to around 5,800 in April 2016. “The ban has not just impacted sales of diesel cars in NCR, but even in other cities due to psychological factors,” Sen said.
Other players like Toyota, M&M and Mercedes Benz, who rely heavily on diesel engines, have also expressed their concern, as well as displeasure. Responding to queries on the impact of the ban on the company’s plans for India, Mercedes Benz India managing director and CEO Roland Folger said most of the company’s decisions stand postponed rather than completely cancelled. “If the ban continues, then certainly cancellations will come into play,” Folger had said recently.
“As an industry, we expect stability, transparency and a clear roadmap as far as policies are concerned. It affects our confidence when suddenly the playing field changes altogether. Give us a roadmap and then stick to it, as large investments are involved,” Honda’s Sen had said recently.