By Pritish Raj
Refuting claims that BS-VI compliant cars will be unaffordable and further impact demand, Mahindra & Mahindra managing director Pawan Goenka said on Monday that come April 2020, the industry will shift to new emission norms as if nothing happened and the price increases will not be as high as anticipated.
M&M on Monday announced that it had nearly completed the process of shifting its entire portfolio of products to BS-VI standards and will be launching a vehicle soon.
“Today, we are all worried as to what will happen when BS-VI kicks in… It will be a non-event and suddenly we all will have BS-VI cars. The industry will continue as if nothing happened,” Goenka said on the sidelines of a knowledge-sharing session on BS-VI emission norms.
M&M will be the second automaker after Maruti Suzuki to upgrade its portfolio from BS-IV to BS-VI norms. Maruti has upgraded select models so far. “Our big fear was that the vehicles will be unaffordable but that fear is gone as it will be slightly expensive but not unaffordable,” Goenka said.
Industry experts believe while BS-VI petrol models would not be too expensive, the diesel variants will see significant hike in price owing to high cost of upgradation.
M&M, which has been for long known for its diesel powertrains, is however gradually stepping into the petrol arena and is developing engines for all its models. It has invested over `1,000 crore for transition of its portfolio to BS-VI norms.
Experts say car sales will further dampen when the new emission norms kick in owing to the increase in prices. Since July 2018, the volume growth of cars and SUVs has been subdued due to the increase in insurance premiums and costlier finance. Auto industry body Siam has also pencilled in a conservative volume growth of 3-5% for FY20.
Goenka believes while the BS-VI compliant cars can be launched ahead of the timeline, diesel models can only be made available when the BS-VI fuel is available across the country.
“We will be ready with our diesel and gasoline BS-VI engines by the end of second quarter this year and probably be able to launch the petrol versions because it does not require a BS-VI fuel. But diesel vehicles will only be launched when the fuel is available,” Goenka said.
Stating that M&M had strong foothold in developing just diesel engines, Goenka said the challenge was to develop a portfolio of petrol engines which are globally competitive.
When asked if the company will absorb a portion of the cost increases, he said it was impossible as there would also be a GST impact.
“We also have to recover our investments and at the same time make some profits,” Goenka added.
The company will let go of some models with 1.2 litre like KUV100, for which the cost of upgradation, especially diesel variants, would be steeper than the higher displacement ones.
While some estimates peg the price increase for diesel models at up to `2 lakh, Goenka stated that for vehicles above four metres, the increase would be about `80,000.
“Customers should not be unhappy if the petrol variants are costlier by around `20,000 as the vehicle will be less polluting,” he said.