The price Maruti will pay for shunning diesel

MUMBAI: Maruti Suzuki’s decision to discontinue diesel models from April next year could cost the automaker leadership position among sub-compact SUVs and a significant share in the compact sedan segment, where the maker of Vitara Brezza and DZire is leader, industry insiders said.As much as 70% of sub-compact SUVs — up to 4-metre length — sold in India run on diesel.Vitara Brezza is currently available only with a diesel engine.The company plans to launch a petrol variant of the Brezza, but the absence of a diesel option could weigh on volumes of the top-selling model in this hotly-contested segment.The DZire, meanwhile, is a favourite choice among taxi operators, who typically prefer diesel as it gives more kilometres for each litre of fuel.In fiscal 2019, about 4.61 lakh units of entry-level sedans and about 3.5 lakh units of sub-compact SUVs were sold in India. About half of these were diesel-powered, which essentially means around 4 lakh units of compact diesels were sold in the last fiscal year.The price premium on diesel cars and SUVs is expected to increase from Rs 1-1.5 lakh now to Rs 2-2.5 lakh post implementation of Bharat Stage-VI emission rules next April, depending on the segment.This may shrink the market for diesel to 1.5-2 lakh unit a year, but that is still a sizeable number that Maruti Suzuki — which makes one in every two passenger vehicles sold in the country — is likely to miss out on.The company last week said that it would stop selling diesel vehicles from April 2020 when BS-VI rules take effect, citing the high cost of developing small diesel engines meeting the new emission regulations. 69088783 “Yes, post BS-VI, the price of diesel cars will go up but for fleet buyers, who drive 300-400 km a day, a diesel car offers more economic value even after BSVI,” said a senior executive at one of the top-five car makers.“With rising affluence, there will be a sizeable chunk of buyers who will be willing to pay a premium for diesel SUVs.”At a post-earnings call to analysts, Maruti Suzuki executives expressed confidence that even in the absence of diesel, the company would be able to compete in the market.Rivals Hyundai Motor, M&M and Tata Motors have decided to upgrade some of their premium hatchbacks, compact sedans and SUVs with diesel options that meet BS-VI rules.

from Economic Times http://bit.ly/2XPVlmH