BS-VI cars to remain a luxury until April 2020
Delhi is one of the country’s top markets for vehicles, especially cars and sports utility vehicles. An early shift to Bharat Stage VI emission norms (in April 2018 against the national plan of an April-2020 roll-out) in the city is to regulate vehicular emission. Two luxury car brands — Mercedes Benz and BMW — have taken a lead in the introduction of BS-VI complaint vehicles.
Vehicle manufacturers are required to control particulate matter (PM) emission and reduce nitrogen oxides (NOx) as they leapfrog from the current BS-IV to BS-VI. For mass carmakers, such as Maruti Suzuki and Hyundai, BS-VI compliance is still a work in progress as they deal with substantially higher volumes and work with a large number of local component suppliers.
Roland Folger, the managing director and chief executive officer for Mercedes Benz in India, said the BS-VI technology for vehicles is costly, especially in case of diesel cars. “In particulate filters for BSVI cars, high-end materials are used so that they burn the PM2.5. Large costs are involved. Engine electronics need to be fine-tuned,” he said.
But, Mercedes had a challenge: while it was making BS-VI cars available nationally (in select petrol and diesel models), the availability of suitable fuel was limited to Delhi. “The big trick for us was to develop BS-VI engines that could also run on BS-IV fuel and still meet the emission standards. It took us a oneand-a-half year to achieve. We assemble the engine locally. These cars will have better resale value. When you will sell these cars five-six years later, you sell in a BS-VI environment. It will fetch more than BS-IV vehicle,” said Folger.
Another German luxury car brand, BMW, has also decided to introduce BS-VI complaint vehicles across its petrol line-up from April. But for volume players like Maruti Suzuki and Hyundai, the transition is a herculean task. “In the mass-model manufacturing, margins are relatively small and such an investment can really affect the profitability. We had 10 years of experience in Europe when we introduce Euro VI complaint (BS-VI equivalent) vehicles there,” said Folger.
In the new emission standard, PM emission for diesel cars would be 80 per cent less than BS-IV and the NOx level would be 83 per cent lower. The sulphur content in fuel norms for diesel and petrol under both V and VI standards are the same at 10 parts per million, though it is substantially less than the 50 mandated for both fuels under BS-IV.
While doing all these changes, the mass-manufacturers will have to be watchful of the price increase as they operate in a highly price-sensitive environment. Mercedes and BMW have not taken a price hike related to BS-VI transition, but mass car prices are likely to surge. An estimated increase of ~100,000 for diesel cars and ~20,000 for petrol cars is expected with the switch to BS-VI.
The country’s biggest carmaker, Maruti Suzuki, said it is on track to meet the 2020 deadline. “It may not be possible to share model-wise details and the quantum of preparedness. Testing multiple models is a big challenge. We run our vehicles for lakhs of kilometres to ensure they meet all the regulations before selling them commercially. Aligning the suppliers is another facet. They will have to do a calibration of the systems and ramp up their capacities to meet automakers’ requirements,” said a company spokesperson. The company said it aims to maximise local manufacturing of components like diesel particulate filters and NOx control systems to keep the cost increase in control.
Maruti Suzuki did not specify if the car models to be launched in 2019 will have BS-IV engines and will later be upgraded to BS-VI. In reference to the roll- out of BS-VI fuel in the capital, Maruti Suzuki said it welcomes the initiative. “This gives us the confidence that the fuel availability achieved across India by April 2020. Considering lower sulphur in BS-VI fuel, we also expect marginally lower emissions and cleaner running of engines in Delhi starting April 2018. Having said that, we feel pan-India fuel availability is a must to have a meaningful impact," the spokesperson said.
“IN THE MASS-MODEL MANUFACTURING, MARGINS ARE RELATIVELY SMALL AND SUCH AN INVESTMENT CAN REALLY AFFECT THE PROFITABILITY. WE HAD 10 YEARS OF EXPERIENCE IN EUROPE WHEN WE INTRODUCED EURO VI COMPLAINT (BS-VI EQUIVALENT) VEHICLES THERE” ROLAND FOLGER, MD & CEO, Mercedes-Benz India