With major carmaker Maruti saying ‘No to diesel cars’ at the wake of BSVI standards, is India heading towards a diesel car-free future?
Maruti Suzuki India Ltd will stop making diesel cars as soon as Bharat Stage VI (BSVI) emissions standards roll in April 2020. The company explains that high cost of compliance with new standards will make small diesel cars unaffordable.
This announcement from Maruti, with half of India’s car market in its grip, may have knocked off a few points initially in the stock market to ruffle the market. But this strategic foresight is logical and wise when there are sure signs of boom to bust trend in diesel car market.
It is reported that from the peak of 47 per cent of new car sales in 2012-13, diesel car sales have plummeted to 19 per cent in 2018-19. Even in the SUV segment, strong diesel bastion, share of diesel SUVs has declined from 98 per cent in 2012 to 83 per cent in 2018-19.
Earlier, one out of every two cars sold in the country was a diesel car; now it’s only one in five. This certainly does not wield confidence for any business to make long-term investment. But this is also the finest evidence of public health concerns shaping markets.
There is deeper imperative behind Maruti’s decision that has implications for rest of the car industry. The interesting paradox is that while the leapfrog to BSVI standards in 2020 is expected to solve several concerns around diesel cars, this cure itself has more lethal side effects.
Good news is that BSVI will cut emissions by more than 80 per cent from new vehicles and reduce the difference between petrol and diesel car emissions. Test parameters will be much tougher: In addition to weighing mass of particulate emissions per kilometer — as is the current practice, diesel particle numbers will also be counted to ensure effective use of particulate traps.
New standards will require more complex and sophisticated emissions control systems: High pressure common rail direct injection, selective catalytic reducing systems for nitrogen oxide (NOx) control (that uses auto-grade urea to reduce exhaust NOx), exhaust gas recirculation system, turbo charger, advance on-board diagnostic systems, lean NOx traps, etc.
While packaging these expensive and complex technical solutions in small to mid-size cars is technically feasible, high cost and concerns around long term and durable on-road performance will pose a serious challenge. This is worrying the car industry today.
Diesel-gate in Europe has exposed wide gap between emissions from cars measured certification in the laboratories (with predefined testing protocol reflecting only some part of driving pattern), and the real-world emissions from actual driving pattern on roads. A lot of this has happened to dodge the tougher requirements for emissions control. Europe has responded by further tightening the test parameters for diesel cars.
India has also inherited some of these reforms that will make tougher demand on car makers. Our cars will also be tested for real world emissions — even as vehicles are moving in the real world, emissions will be monitored from the full range of driving conditions.
This will monitor deviation from the certification level and ensure durable performance of emissions control systems. Some of these tougher measures will be enforced only in 2023. These include real world emissions monitoring using portable emissions measurements, in-service compliance, Not-to-exceed Emission Limits with conformity factor to narrow down the margin of emission deviation on road.
But India will still have to do more to align fully with European reforms. Market surveillance, independent verification testing and inspection by regulatory authorities of in-use vehicles and public disclosure of emissions data will become necessary.
Maruti has added a cautious rider that it may produce bigger diesel cars depending on consumer demand. It is not yet possible to predict how the rest of the industry will strategise. Some market watchers also feel that diesel cars may come back to meet tighter fuel economy norms as diesel cars are more fuel efficient.
But this is erroneous and inconsistent with the way global technology pathways are evolving to meet the air pollution and climate change mitigation targets. The global market is changing gears to get off the diesel route to go the electric and hybrid way. Diesel is not the future solution.
Europe, which was most obsessed with diesel cars primarily to meet carbon dioxide (CO2) / fuel economy targets, has reported a slowdown in diesel car sales since 2017. European Automobile Manufacturers Association (ACEA) has reported that, instead, sales of “alternative” vehicles — hybrid, electric, liquefied petroleum gas and natural gas-powered vehicles — have increased.
Madrid and Athens are banning diesel cars entirely. The sales of diesel cars have crashed in the UK as pollution fears grow. The UK and France plan to ban new petrol and diesel cars and vans from 2040. France plans to reverse favourable tax treatments for diesel. Copenhagen’s mayor has announced plans to ban new diesel cars from entering the Danish capital by 2019. Diesel Cars have lost market share even in Germany — the stronghold of diesel car manufacturing.
European consumers are also gradually turning away from diesel cars. Several auto makers in Europe have increased investment in electric cars as regulators have pushed for tougher rules. Volkswagen has announced complete makeover to electric cars.
The Indian market cannot remain insular to global trends. Tougher requirements for real-world emissions performance, fears of emissions cheating, big push for electric vehicle programme, incentive for electric vehicles under fuel economy regulation, and air quality and climate mitigation targets will further shrink the space for diesel cars in the Indian market. Even the Society for Indian Automobile manufactures hopes for 40 per cent electric vehicle in new sales by 2030. This is disruptive.
The car industry must also not underestimate the power of public awareness. Concerns around health risk from toxic diesel emissions have catalysed the compressed natural gas (CNG) transition and advancement of emissions standards nation-wide.
Following the Supreme Court directives, more than 10-year-old diesel trucks cannot enter Delhi, big diesel cars and SUVs with engines displacing more than 2000 cc pay environment pollution charge, all diesel trucks pay environment compensation charge to enter Delhi, and environment cess is collected from each litre of diesel sold in Delhi.
Diesel cars that are more than 10-year-old are banned. Social media campaigns are shunning diesel cars. India has fought one of the longest and toughest battles against dieselisation that has finally dented the sales curve.
This curve will bend further as health evidences mount. The new study from US-based International Council of Clean Transportation has exposed that diesel exhaust is responsible for nearly half of the transport sector-related deaths globally and two-thirds in India, France, Germany, and Italy.
Among the 100 major urban centres, Delhi ranks sixth with highest transport emissions-related health burden. Moreover, diesel particulate matter, rich in black carbon, is also a climate rouge as it is several times more heat trapping than CO2.
Maruti’s announcement is a shadow of things to come. The automobile industry has to prepare for more disruptive new generation solutions. With more aware consumers, diesel cars will no longer be the ‘cool’ thing to buy. That will ultimately shape the future trajectory.
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